A Study on the Performance of Large Cap

Equity Mutual Funds in India

Prakash Yalavatti* and Bheemanagouda**

Mutual funds are best investment avenues for a large number of investors in recent days. Risk and
return are the basic features of mutual fund. The present study evaluates and compares the
performance of large cap equity funds of four asset management companies (L&T, DHFL
Pramerica, HDFC and Principal Mutual Fund). The results of the study show that L&T India
Large Cap Equity Fund outperforms the benchmark index, i.e., NSE Nifty 50, in terms of all
measurement ratios. The performance of Principal Large Cap Fund and HDFC Top 200 is
moderate and they also outperform the benchmark index. However, DHFL Pramerica Large Cap
Equity Fund’s performance is very poor as compared to other selected funds.

Introduction
India is the fastest growing largest economy in the world and it has been consistently registering
high growth rate after introduction of Liberalization Privatization Globalization (LPG) in
1991. The economic growth rate was 7.6% in 2015-16. But still Indian economy is labeled as
a developing economy in the world. The urgent need of the hour is to increase the overall
production to make India a developed country by 2020. But this process requires huge amounts
of investment in production activities. There are many ways to channelize funds from savers
to production activities. Mutual fund is one of the best ways in channelizing especially the
funds from small and medium investors to production activities, as India is a country with a
large number of small and medium savers. The total gross amount mobilized by the mutual
fund industry was 97,68,100 cr in the 2013-14 financial year. So, the mutual fund industry
has been playing a significant role in the progress of the economy of India by becoming the
key industry in providing capital to economic activities.
In recent days, mutual funds have been getting a lot of attention from small and medium
investors. The investment in equity scheme is a common decision of a majority of aggressive
investors as it is the only fund to give maximum return to investors as compared to other
kinds of mutual funds. In equity fund itself, there are many diversified schemes available for
investors like large cap equity fund, mid-cap equity fund, small-cap equity fund, sector fund,
* Assistant Professor, Department of PG Studies and Research in Commerce, Vijayanagara Sri Krshinadevaraya
University, Jnana Sagara Campus, Ballari, Karnataka 583105, India; and is the corresponding author.
E-mail: prakash.yalavatti9900@gmail.com
** Professor, Department of PG Studies and Research in Commerce, Vijayanagara Sri Krshinadevaraya University,
Jnana Sagara Campus, Ballari, Karnataka 583105, India. E-mail: bheemanagouda@gmail.com

©
30 2017 IUP. All Rights Reserved. The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
thematic fund, etc. These equity schemes carry different amounts of risk and return to investors.
Therefore, a study on risk and return of equity schemes is necessary for every investor to make
an appropriate investment decision to achieve wealth maximization objective. From the related
literature, it is observed that none of the research studies focused on the performance of large
cap equity funds. Hence, the present study on the performance of large cap equity mutual funds
in India is undertaken to fill this gap and to give fruitful information to the investors and fund
managers to make best decisions regarding investment of fund.

Literature Review
Yadav and Yadava (2012) made an attempt to analyze the contribution of mutual funds and
FIIs in aggregate investment in the Indian economy. They found that investment made by
the mutual funds is greater than the investment made by FIIs in aggregate. The study reveals
that mutual funds are mainly invested in debt instruments, whereas FIIs have dominated in
equity investment. Finally, the study says that during the recession period, mutual funds
played a vital role in pushing the economy upward and FIIs withdrew their investments. So,
the authors opine that mutual fund works as a good pickup and boosting engine and FIIs act
as a good running engine for the economy.
Prakash and Sundar (2014) tried to analyze the performance of equity-oriented schemes
of three private mutual fund companies, viz., HDFC Mutual Fund Company, ICICI Mutual
Fund Company, and Franklin Templeton, and the study concluded that the relation between
mutual fund performance and fund characteristics is a much interesting aspect for financial
market practitioners and investors. Annapurna and Pradeep (2013) made an attempt to
analyze the return of selected mutual fund schemes. The study concluded that the mean
return on equity mutual fund schemes is higher than the mean return on other mutual fund
schemes and SBI domestic term deposit rate. The mean return on debt mutual fund schemes
is lower than SBI domestic term deposit rate. But the mean return on money market mutual
funds is consistently positive and very close to SBI demotic term deposit rate.
Rakesh (2012) tried to evaluate the fund’s performance, level of diversification, managers’
capability to pick the undervalued stocks and time the market of 28 equity diversified mutual
fund schemes of various fund houses between 2007 and 2011. The study revealed that 60% of
sampled fund schemes performed better than the market and are exposed to larger risks. The
rest of the schemes had poor performance with larger risk. The study found that a majority of
the fund schemes were reasonably diversified. The study also reveals that about 58% of fund
schemes were able to beat the market by stock selection skills. As far as the timing of the
market is concerned, the fund managers almost failed to both book profits in the up market
and accumulate stock in the down market. Vijayakumar et al. (2012) made an attempt to
examine the relationship between fund performance and fund characteristics using 14 open-
ended funds from 2004 to 2008. The fund performance is measured by fund return, and its
determinants are measured by standard deviation, fund size, turnover ratio, income ratio,
and expenses ratio. The study reveals a strong positive relationship between fund performance
and fund riskiness proxied by standard deviation of return, fund size and expenses ratio, and

A Study on the Performance of Large Cap Equity Mutual Funds in India 31

negative relationship between fund performance and turnover ratio. Finally, the study
suggested that fund managers need to enrich their knowledge and skill to react actively in
accordance with the changes in the market environment.
Kshama and Prerna (2014) made a comparative study of the performance of equity funds
focusing on the growth of public sector mutual funds and private sector mutual funds. The
study basically evaluated the risk and return profile of the equity funds of the selected sample
companies from both the sectors. The study concluded that there is a significant difference
between the performance of private and public sector mutual funds, and the private sector
has performed better than the public sector. Vijayalaxmi (2014) tried to analyze the growth
and development of Indian mutual fund industry and banking sector funds in respect of size
and assets under management. The research study pointed out that there was faster growth
and development in mutual funds industry in terms of assets under management and number
of schemes, as mutual funds are the best means of investment for small savers to get secured
return at higher rate. The study also indicated that year 2012 saw a consistent growth in
investment in banking stocks by the industry’ equity fund managers and their exposure had
risen from 17.23% of total Asset Under Management (AUM) in January 2012 to 21.15% in
December 2012.
Manju (2011) tried to measure the performance of mutual fund managers on the parameters
of ‘stock selection’ and ‘market-timing’ ability using Jensen’s alpha and Merton-Herriksson
model on a sample of 36 Indian mutual fund schemes, with S&P CNX Nifty as a benchmark.
The study revealed that on an average, fund managers are not able to predict security prices
well enough to outperform a buy-the-market and hold policy. The study also revealed that
there was very little evidence of individual fund being able to do significantly better than
expected from random chance. Finally, the study suggests that the performance of the mutual
funds is not superior to the market during the study period, though a few funds are performing
better than the market.

Objective
The present paper aims to:
• Study the growth of mutual fund industry in India.
• Examine the performance of large cap equity mutual funds of select Asset
Management Companies (AMCs).
• Compare the performance of large cap equity mutual funds of select AMCs.

Data and Methodology

Table 1 presents the AMCs and schemes which have been selected for the study based on
minimum five years of track records of schemes from 2011 under convenience sampling
method. The present research study is based on purely secondary data. The secondary data
has been obtained from different sources like selected AMCs’ websites, AMFI website, books,
journals, etc.

32 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
 Table 1: Selected Asset Management Companies and Schemes

S. No. Asset Management Companies Large Cap Equity Schemes (Regular)-Growth

1. L&T Mutual Funds L&T India Large Cap Equity Fund

2. DHFL Mutual Fund DHFL Pramerica Large Cap Equity Fund

3. HDFC Mutual Fund HDFC Top 200 Fund

4. Principal Mutual Fund Principal Large Cap Fund

Statistical Techniques
In this study, different statistical tools like percentage, average, standard deviation, Sharpe
index, Treynor’s index and Jensen alpha have been used for processing the data. The risk-free
rate of return considered for computation of Sharpe ratio and Treynor ratio for study period
is given in Table 2.

Table 2: Risk-Free Rate of Return (in %)

Year 2011 2012 2013 2014 2015

Rf 7.50 8.20 7.85 8.74 8.18

Source: RBI Monthly Bulletins of Different Years

Results and Discussion

Growth of Indian Mutual Fund Industry
Table 3 shows the growth of Indian mutual fund industry over a period of 10 years from
2004-05 to 2013-14. It is observed that mutual fund industry is playing a crucial role in the
economic development of India. The amount mobilized by the mutual fund industry had
substantially increased during the period 2004-05 to 2013-14. The total amount mobilized
was 839,708 cr during 2004-05, and out of this amount, 736,463 cr was mobilized by the
private sector mutual funds and 103,245 cr was mobilized by the public sector mutual funds.
The total amount mobilized by the mutual fund industry increased to 1,098,149 cr in
2005-06. The share of private sector and public sector was 914,703 cr and 183,446 cr
respectively. In the year 2006-07, the total amount mobilized increased to 1,938,493 cr, and
in this, the share of private sector was high. Similarly, in 2007-08, the total amount mobilized
was 4,464,377 cr, which was more than double the amount mobilized in the preceding year..
In 2009-10 the amount mobilized by private and public sector was 7,698,483 cr and
2,320,539 cr respectively. The total amount mobilized was 10,019,022 cr which was the
highest amount mobilized in a year during the study period 2004-05 to 2013-14. In the following
years 2010-11 and 2011-12, the total amount mobilized decreased to 8,859,515 cr and
6,819,679 cr respectively. In next two years, there was again an increase in the mobilized

A Study on the Performance of Large Cap Equity Mutual Funds in India 33

 Table 3: Gross Mobilization of Funds by Mutual Funds in India ( in cr)

Year Private Sector Public Sector Total

2004-05 736,463 103,245 839,708

2005-06 914,703 183,446 1,098,149

2006-07 1,599,873 338,620 1,938,493

2007-08 3,780,753 683,624 4,464,377

2008-09 4,292,751 1,133,603 5,426,354

2009-10 7,698,483 2,320,539 10,019,022

2010-11 6,922,924 1,936,591 8,859,515

2011-12 5,683,744 1,135,935 6,819,679

2012-13 5,987,889 1,279,996 7,267,885

2013-14 8,049,397 1,718,703 9,768,100

Source: Data Collected from AMFI Website

Figure 1: Total Gross Mobilization of Funds by Mutual Funds in India

12,000,000
Gross Mobilization of Funds

10,000,000

8,000,000
( in cr)

6,000,000

4,000,000

2,000,000

0
2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

Years

Private Sector Public Sector Total

34 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
amount, 7,267,885 cr in 2012-13 and 9,768,100 cr in 2013-14. Thus the total amount
mobilized by mutual fund industry has gradually increased and made its mark in the
contribution to the economic development of the country (Figure 1).

Performance of Large Cap Equity Mutual Funds

The analysis of the performance of large cap equity funds has been done in three categories.

Return-Related Analysis
Table 4 depicts the average return of select large cap equity mutual funds and benchmark
index, i.e., NSE-Nifty 50, for the study period. Funds have been ranked based on average rate
of return from higher to lower. It is observed that all selected large cap equity funds have
outperformed their benchmark index, except DHFL Pramerica Large Cap Equity Fund. The
average return of L&T India large cap fund is 10.03% which is higher than benchmark index
return, i.e., 6.48%. Similarly, average returns of HDFC Top 200 fund and Principal Large Cap
Equity Fund are 8.70% and 8.41% respectively. The average returns of these funds are also
higher than the benchmark index return, but are lower than the average return of L&T India
Large Cap Equity Fund. Therefore, L&T India Large Cap Equity Fund is ranked in the first
position and HDFC Top 200 Large Cap Equity Fund and Principal Large Cap Equity Fund are

Table 4: Return of Select Large Cap Equity Funds-Growth Option (R)

and Benchmark Index (in %)
Benchmark Asset Management Companies’ Schemes
Index
Year L&T India DHFL Pramerica HDFC Principal
NSE
Large Cap Large Cap Top 200 Large
Nifty 50
Equity Fund Equity Fund Fund Cap Fund

2011 –26.58 –19.29 –29.52 –26.57 –29.00

2012 25.61 22.00 23.04 29.44 27.87

2013 8.14 8.43 5.85 5.74 4.33

2014 28.09 37.84 25.84 39.53 37.07

2015 –2.85 1.19 0.44 –4.65 1.79

Average 6.48 10.03 5.13 8.70 8.41

Deviation – 3.55 –1.35 2.22 1.93

Performance – Outperformed Underperformed Outperformed Outperformed

Rank – 1 4 2 3

Source: Calculated based on NAV Data of Respective Schemes and Benchmark Index
(NAV Data Obtained from Website of Respective AMCs and Benchmark Index)

A Study on the Performance of Large Cap Equity Mutual Funds in India 35

ranked at second and third positions respectively. DHFL Pramerica Large Cap Equity Fund
underperforms with regard to the benchmark index by 1.35%. So, this fund is ranked at
fourth position with respect to performance.

Risk-Related Analysis
Table 5 reveals the riskiness of selected large cap equity funds and benchmark index, i.e.,
NSE-Nifty 50. It compares the standard deviation of select large cap equity funds and
benchmark index. The standard deviation is a measure of total risk of fund. Total risk includes
systematic risk and unsystematic risk. The higher value of standard deviation indicates high
volatility in fund return. Here the funds have been ranked on the basis of their level of
riskiness (i.e., the lower the risk, the higher the return). It is observed from the table that
except HDFC Top 200, all funds are less risky as compared to the risk of benchmark index.
The average standard deviation of L&T India Large Cap Equity Fund is 15.16%, which is
less than the standard deviation of benchmark index, i.e., 16.47%, and also the standard
deviation of other select equity funds. So this fund is ranked in the first position on the basis
of less riskiness. Similarly, the Principal Large Cap Equity Fund and DHFL Pramerica large
cap equity mutual fund have standard deviation of 15.18% and 16.04% respectively. But their
standard deviation is more than that of the L&T India large cap equity mutual fund. Therefore,
Principal Large Cap Equity Fund and DHFL Pramerica large cap equity mutual fund are

Table 5: Standard Deviation of Select Schemes of Large Cap Equity Funds-Growth

Option(R) and Benchmark Index (in %)
Benchmark
Index Asset Management Companies’ Schemes

Year L&T India DHFL Pramerica HDFC Principal

NSE
Large Cap Large Cap Top 200 Large
Nifty 50
Equity Fund Equity Fund Fund Cap Fund

2011 20.81 16.76 19.10 18.82 17.01

2012 15.15 12.65 15.50 16.35 13.00

2013 17.92 15.82 16.38 18.81 16.42

2014 12.44 13.78 12.98 16.14 13.97

2015 16.03 16.79 16.22 17.99 15.52

Average 16.47 15.16 16.04 17.62 15.18

Deviation – –1.31 –0.43 1.15 –1.29

Riskiness – Less Less More Less

Rank – 1 3 4 2

Source: Calculated based on NAV Data of Respective Schemes and Benchmark Index
(NAV Data Obtained from Website of Respective AMCs and Benchmark Index)

36 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
ranked at second and third position respectively. The standard deviation of HDFC Top 200
fund is 17.62%, which is more than that of the benchmark index and other select mutual
funds. Hence this fund is ranked at the fourth position on the basis of its riskiness.
Table 6 represents the systematic risk () of all select large cap equity mutual funds. Beta
is a measure of systematic risk of a portfolio. It indicates the volatility of fund return in
relation to a representative index or benchmark. A higher value of beta indicates a high
sensitivity of fund return against market return variation. So here funds have been ranked
based on less sensitivity of funds against market return variation. From the table, it can be
observed that the beta value of Principal Large Cap Equity Fund is just 0.89. It means that the
fund is less sensitive to market return variation as compared to other funds. So this fund is
ranked in the first position. Similarly, average beta value of L&T India Large Cap Equity
Fund is 0.90. It means that the fund is a little more sensitive to market return variation as
compared to the sensitivity of Principal Large Cap Equity Fund and is less sensitive than
DHFL Pramerica large cap fund and HDFC Top 200 fund. Therefore, the fund is ranked at
second position based on less riskiness. The beta value of DHFL Pramerica Large Cap Equity
Fund is 0.96. It is very close to 1. So it implies that the fund is more sensitive to the market
return variation. However, compared to HDFC Top 200 fund, it is a less risky fund. Therefore,
this fund is ranked at the third position. Further, beta value of HDFC Top 200 fund is 1.05. It
indicates that the fund is highly sensitive to market return variation. Just 1% variation in
benchmark index leads to 1.05% variation in fund return. Thus, HDFC Top 200 fund is a
highly sensitive fund as compared to all other funds and is ranked at the fourth position.
Table 6: Systematic Risk (Beta) of Select Schemes
of Large Cap Equity Funds-Growth (R) (in %)
Asset Management Companies’ Schemes

Year L&T India DHFL Pramerica HDFC Principal

Large Cap Large Cap Top 200 Large
Equity Fund Equity Fund Fund Cap Fund

2011 0.80 0.91 0.89 0.80

2012 0.81 1.00 1.05 0.82

2013 0.87 0.90 1.01 0.82

2014 1.04 1.00 1.21 1.06

2015 1.00 0.99 1.08 0.94

Average 0.90 0.96 1.05 0.89

Rank 2 3 4 1

Source: Calculated based on NAV Data of Respective Schemes and Benchmark Index
(NAV Data Obtained from Website of Respective AMCs and Benchmark Index)

A Study on the Performance of Large Cap Equity Mutual Funds in India 37

Risk-Adjusted Return Analysis
Table 7 shows the performance of selected large cap equity funds and benchmark index (NSE
Nifty 50) based on Sharpe index. The Sharpe index indicates the excess of fund return over
risk-free rate of return in relation to the total risk (standard deviation). The higher value of
Sharpe ratio shows higher performance of the fund. It is observed from the table that except
DHFL Pramerica Large Cap Equity Fund, all selected large cap equity funds’ Sharpe index is
positive. This means all these funds have outperformed the market index.
The Sharpe value of L&T India Large Cap Equity Fund is 0.24, which is higher than that
of the benchmark index, i.e., 0.08. This implies that the fund has outperformed the market
index in respect of return and is ranked at first position because its Sharpe index is greater
than that of the other selected mutual funds. The Principal large cap-equity fund’s Sharpe
value is 0.15 which is also higher than the Sharpe value (0.08) of the benchmark index. It
means this fund’s performance is better than benchmark index’s performance, but less than
the performance of L&T India Large Cap Equity Fund . So, it is ranked at second position
with respect to performance. Similarly, HDFC Top 200 fund outperforms the benchmark
index as its Sharpe value is 0.11, which is higher than that of the benchmark index (0.08).

Table 7: Sharpe’s Index of Select Schemes

of Large Cap Equity Funds-Growth (R) (in %)

Benchmark Asset Management Companies’ Schemes

Index
Year L&T India DHFL Pramerica HDFC Principal
NSE
Large Cap Large Cap Top 200 Large
Nifty 50
Equity Fund Equity Fund Fund Cap Fund

2011 –1.64 –1.60 –1.94 –1.81 –2.15

2012 1.15 1.09 0.96 1.30 1.51

2013 0.02 0.04 –0.12 –0.11 –0.21

2014 1.55 2.11 1.32 1.91 2.03

2015 –0.69 –0.42 –0.48 –0.71 –0.41

Average 0.08 0.24 –0.05 0.11 0.15

Deviation – 0.17 –0.13 0.04 0.07

Performance – Out Under Out Out

performed performed performed performed

Rank – 1 4 3 2

Source: Calculated based on NAV Data of Respective Schemes and Benchmark Index
(NAV Data Obtained from Website of Respective AMCs and Benchmark Index)

38 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
However, this fund’s performance is not better compared to that of L&T India large equity
fund and Principal Large Cap Equity Fund. Hence, this fund is ranked at the third position
based on its performance as per Sharpe index. Further, the sharpe ratio of DHFL Large Cap
Equity Fund is negative (–0.05). This implies that the fund underperforms with respect to
the benchmark index. This is the only fund with negative Sharpe value among the chosen
funds. Therefore this fund is ranked at the fourth position.
Table 8 shows the performance of the select large cap equity mutual funds and the
benchmark index according to the Treynor’s index. The Treynor index measures the risk
premium in relation to the systematic risk ( ). The risk premium is the difference between
fund return and risk-free rate of return. The higher value of Treynor index indicates higher
performance of fund. Here funds have been ranked based on their higher value of Treynor
index. It is observed from the table that except L&T India Large Cap Equity Fund, all other
selected large cap equity mutual funds and benchmark index have negative Treynor’s value.
L&T India Large Cap Equity Fund is the only fund which shows a positive Treynor’s value
(1.04), therefore this fund is ranked at the first position.
The Treynor’s index value of Principal Large Cap Equity Fund and HDFC Large Cap
Equity Fund are –1.2 and –1.32 respectively. However, the funds outperform the benchmark

Table 8: Treynor’s Index of Select Schemes

of Large Cap Equity Funds-Growth (R) (in %)

Benchmark
Asset Management Companies’ Schemes
Index

Year NSE L&T India DHFL Pramerica HDFC Principal

Nifty Large Cap Large Cap Top 200 Large
50 Equity Fund Equity Fund Fund Cap Fund

2011 –34.08 –33.52 –40.81 –38.41 –45.71

2012 17.41 17.07 14.82 20.30 24.07

2013 0.29 0.66 –2.22 –2.08 –4.29

2014 19.35 27.99 17.11 25.41 26.72

2015 –11.03 –7.01 –7.82 –11.83 –6.80

Average –1.61 1.04 –3.79 –1.32 –1.20

Deviation – 2.65 –2.17 0.29 0.41

Performance – Out Under Out Out

performed performed performed performed

Rank – 1 4 3 2

Source: Calculated based on NAV Data of Respective Schemes and Benchmark Index
(NAV Data Obtained from Website of Respective AMCs and Benchmark Index)

A Study on the Performance of Large Cap Equity Mutual Funds in India 39

index. DHFL Large Cap Equity Fund underperforms with regard to the benchmark index as
Treynor’s index value of fund is a higher negative value (–3.79) as compared to the benchmark
index value (–1.61). Hence this fund is ranked at the fourth position.
Table 9 depicts the performance of mutual fund schemes on the basis of Jensen’s alpha
value. The Jensen’s alpha measures the ability of fund manager to generate excess return over
the expected market return. The Jensen’s alpha measures risk-adjusted performance of a
security or portfolio in relation to expected market return. This measure is one of the best
methods for measuring the performance of funds. A positive alpha value indicates that the
fund manager is able to generate excess return in relation to expected market return. Here
funds have been ranked based on the high positive value of alpha.
L&T India Large Cap Equity Fund shows Jensen alpha value of 2.02, which is higher than
the alpha values of rest of the funds. So, this fund is ranked at the first position. Similarly,
Principal Large Cap Equity Fund and HDFC Top 200 Large Cap Equity Fund have alpha
values of 0.84 and 0.65 respectively. This implies that the managers of these funds are able to
generate excess return over the expected market return. The DHFL Large Cap Equity Fund is
the only fund which has negative alpha value (–2.01). It indicates that the fund manager is

Table 9: Jensen’s Alpha Value of Select Schemes

of Large Cap Equity Funds-Growth (R) (in %)

Asset Management Companies’ Schemes

Year L&T India DHFL Pramerica HDFC Principal

Large Cap Large Cap Top 200 Large
Equity Fund Equity Fund Fund Cap Fund

2011 –2.89 –6.11 –3.85 –9.29

2012 –0.30 –2.60 3.03 5.45

2013 0.32 –2.27 –2.41 –3.76

2014 8.98 –2.24 7.35 7.81

2015 4.01 3.18 –0.86 3.98

Average 2.02 –2.01 0.65 0.84

Performance Out Under Out Out

performed performed performed performed

Rank 1 4 3 2

Source: Calculated based on NAV Data of Respective Schemes and Benchmark Index
(NAV Data Obtained from Website of Respective AMCs and Benchmark Index)

40 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
not able to generate excess return over expected market return. So, this fund is ranked at the
fourth position based on its performance.

Suggestions
Based on the findings of the study, the following are suggested:
To Investors
• The investors are advised to invest their savings in L&T India Large Cap Equity
Fund as this fund is comparatively the best performing fund in terms of return,
Sharpe index value, Treynor’s index value and Jensen’s alpha value. Moreover, it is
a less risky fund.
• The investors of DHFL Pramerica large cap equity mutual fund have not benefited
from their investment during the study period. So for better results the investors
have to switch the fund for investment.
• The return of investors of HDFC Top 200 fund is more subject to market risk. So
the investors need to be alert about changes in the benchmark index.
• If investors of Principal Large Cap Equity Fund are risk avoiders, then they can
continue their investment in the fund as it is a less risky fund and has a positive
Jensen’s alpha value.
To Scheme Fund Managers
• The L&T India Large Cap Equity Fund is the best performing fund during the
study period. However, the systematic risk of the fund is a little higher, so the fund
manager has to be careful regarding this risk.
• The fund manager of DHFL Pramerica Large Cap Equity Fund needs to make
conscious decision in order to improve the performance of the fund as it
underperforms with regard to the benchmark index in terms of return, Sharpe
index value and Treynor index value. In addition, the Jensen’s alpha value is also
negative.
• The HDFC Top 200 fund is a more risky fund. So, the fund manager has to take
steps to minimize the standard deviation of the fund by controlling the unsystematic
risk that attracts more investors to invest in the fund.
• The fund manager of HDFC Top 200 should also take utmost care while taking
decisions as the fund’s performance is more sensitive to variations in the
benchmark index.
• The performance of Principal Large Cap Equity Fund is better as it is ranked second
among the selected mutual funds in terms of most of the parameters. However, the
fund manager has to take appropriate decisions for improving the performance of
the fund and it helps to retain the existing investors and attract prospective
investors.

A Study on the Performance of Large Cap Equity Mutual Funds in India 41

Conclusion
Based on the above analysis, the main findings of the study are:
• During the study period the average return of L&T India Large Cap Equity Fund
is obtained as 10.03%, which is higher than the return of the benchmark index
(6.48%) and other selected large cap equity funds. So, it is concluded that L&T
India Large Cap Equity Fund is the best performing fund. On the other hand, the
DHFL Pramerica Large Cap Equity Fund’s performance is worst as its average rate
of return is just 5.13%, which is less than that of the benchmark index and other
selected large cap equity funds.
• The L&T India Large Cap Equity Fund followed by Principal Large Cap Equity Fund
and DHFL Pramerica Large Cap Equity Fund are less risky funds as the standard
deviation of these funds are less than that of the selected benchmark index. The
HDFC Top 200 fund is a risky fund because its standard deviation is higher than
that of the benchmark index.
• The sensitivity of fund return in relation to variation in benchmark index is more
in the case of HDFC Top 200 fund as its beta value is 1.05. The sensitivity is less in
the case of DHFL Pramerica Large Cap Equity Fund, Principal large cap
equity fund and L&T India Large Cap Equity Fund as their beta value is less than 1.
• According to Sharpe ratio, the average performance of the L&T India Large Cap
Equity Fund is best among the selected large cap funds. The average performance
of Principal Large Cap Equity Fund and HDFC Top 200 Large Cap Equity Fund is
also better as compared to that of the benchmark index. However, the performance
of these funds is lower than that of the L&T India Large Cap Equity Fund. The
DHFL Pramerica Large Cap Equity Fund underperforms with respect to the
benchmark index as its Sharpe ratio is positive but less than that of the benchmark
index.
• According to Treynor’s index, the average performance of L&T India Large Cap
Equity Fund is higher than that of the benchmark index and other selected large
cap funds. So this fund is considered as the best performing fund. The Treynor
index values of Principal Large Cap Equity Fund and HDFC Top 200 Large Cap
Equity Fund are negative, but higher than the Treynor index value of benchmark
index. Therefore, these funds also outperform the benchmark index but
underperform with regard to L&T India Large Cap Equity Fund. The Treynor
index value of DHFL Pramerica Large Cap Equity Fund is negative and higher
than the Treynor index value of the benchmark index. So, the fund underperforms
with regard to the benchmark index.
• According to Jensen’s measure, the alpha value of L&T India Large Cap Equity
Fund is higher than that of the other selected funds. It implies that the fund

42 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
 manager’s ability to generate additional return is more in case of L&T India Large
Cap Equity Fund. Similarly, the alpha values of Principal large cap equity and
HDFC Top 200 fund reveal that the fund manager’s ability to generate extra
return in relation to expected return is good, but less than the fund manager of
L&T India Large Cap Equity Fund. The DHFL Pramerica Large Cap Equity Fund’s
alpha value is negative. It implies that the fund manager is not able to generate
extra return in relation to expected market return.
Thus, the study concludes that L&T India Large Cap Equity Fund outperforms the
benchmark index and its performance is also high as compared to other selected schemes
during the study period. Subsequently, the risk-adjusted performance of Principal large cap
fund is better compared to the remaining two schemes, while the performance of HDFC Top
200 and DHFL Pramercia Large Cap Equity Funds is moderate. So, finally the investors of the
selected schemes of mutual fund are advised to revise their portfolio to include better
performing funds in it and achieve the investment objective.
Limitations and Scope for Future Studies:
• The study is limited to the analysis of large cap equity funds under four AMCs only.
• The research analysis is based on the past performance of select large cap equity
schemes and does not provide any assurance of the future performance of the
funds.
• As large cap equity schemes are considered for the purpose of research, results are
not relevant for the other mutual fund schemes.
Future studies can consider more AMCs and they can also compare the performance of
large cap funds with that of mid-cap funds. 

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Reference # 37J-2017-12-02-01

44 The IUP Journal of Financial Risk Management, Vol. XIV, No. 4, 2017
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