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Large-cap refers to companies ranked 1–100 by full market capitalisation on Indian exchanges, as defined by the Securities and Exchange Board of India (SEBI) in its Categorisation and Rationalisation of Mutual Fund Schemes Circular (SEBI/HO/IMD/DF3/CIR/P/2017/114, October 2017). AMFI publishes an updated list every six months (January and July), and fund houses must realign their portfolios within three months of each rebalancing.
How the category is defined
SEBI's October 2017 circular mandates that a large-cap equity fund invest a minimum of 80% of net assets in large-cap stocks (rank 1–100 by market cap). The remaining 20% may be deployed at the fund manager's discretion across any market-cap segment or debt instruments.
AMFI maintains the official list under its "AMFI Research Note" published bi-annually. The list uses six-month average full market capitalisation computed from NSE and BSE data. A company's eligibility changes only at the bi-annual rebalancing — intra-period price movements do not reclassify the stock. As at the January 2025 AMFI list, the 100th company by market cap threshold stood at approximately ₹30,000 crore.
Each AMC may operate only one large-cap fund under SEBI categorisation rules. This prevents product proliferation across the same mandate within a single fund house.
What investors should look at
Key analytical dimensions for large-cap funds:
- Tracking error vs. benchmark: Most large-cap active funds are benchmarked to Nifty 50 or Nifty 100 TRI. Lower tracking error with consistent alpha indicates disciplined stock selection rather than closet indexing.
- Expense ratio: SEBI TER slabs (SEBI/HO/IMD/DF2/CIR/P/2018/170) cap large-cap TER at 1.05% for ≥₹10,000 crore AUM in the equity slab. Direct plans carry lower TER; check the difference vs. regular plans before selecting.
- Portfolio concentration: The top 10 holdings typically account for 40–60% of net assets in large-cap funds. Higher concentration amplifies stock-specific risk even within the large-cap universe.
- Active share: A measure of how different the portfolio is from the benchmark. High active share in large-cap funds can indicate meaningful conviction bets but also higher idiosyncratic risk.
- Rolling return consistency: Look at 3-year rolling returns over 5+ years to assess performance durability rather than single-period snapshots.
Worked example
Consider two large-cap funds benchmarked to Nifty 100 TRI, reviewed as at 31 March 2025 (figures illustrative, sourced from AMFI NAV data and public factsheets):
| Fund | AUM (₹ Cr) | 3Y Annualised Return | Nifty 100 TRI (3Y) | Alpha | Expense (Direct) |
|---|---|---|---|---|---|
| SBI Bluechip Fund – Direct | ≈46,000 | 16.8% | 15.4% | +1.4% | 0.82% |
| HDFC Top 100 Fund – Direct | ≈35,000 | 15.2% | 15.4% | –0.2% | 0.87% |
Both funds comply with the ≥80% large-cap allocation mandate. SBI Bluechip generated positive alpha over the period; HDFC Top 100 marginally underperformed. Neither outcome is guaranteed to persist — past performance does not predict future results. The comparison illustrates the importance of tracking multiple rolling windows rather than a single period.
See also
Primary source
SEBI Circular SEBI/HO/IMD/DF3/CIR/P/2017/114 (6 October 2017) — Categorisation and Rationalisation of Mutual Fund Schemes: sebi.gov.in. AMFI Bi-Annual Categorisation List: amfiindia.com.
Past performance is not indicative of future returns. Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. ARN-314872. APMI APRN-01658. Content is informational and not investment advice.