Top Large-cap Mutual Funds For NRIs In 2024

Mutual funds, particularly equity funds, are the top choice for NRIs when it comes to Indian investments.

Large-cap mutual funds are known for their reliability, with proven ability to withstand challenging market conditions.

Investing in a large-cap fund provides better stability, promises significant growth potential, instilling optimism and confidence in your investment journey. 

They are ideal for conservative investors seeking long-term financial goals with lower risk compared to mid-cap or small-cap funds.

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What Are Large Cap Mutual Funds?

A large-cap fund invests up to 80% of its assets in stocks with large market capitalization.

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The Securities Exchange Board of India (SEBI) categorizes the top-100 stocks by market-cap as large-cap stocks.

The fund manager has the option to allocate the remaining 20% funds to mid-cap, small-cap, debt funds or government securities.

By opting for large-cap mutual fund investments, you will be investing in funds that primarily focuses to

• Invest in blue chip stocks
• Provide stability
• Provide liquidity
• Bear low risk and volatility compared to mid cap and small cap funds

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Best Large Cap Mutual Funds For NRIs And OCIs In 2024

Selecting the best large-cap mutual funds can be challenging, especially since many funds from different houses invest in similar stocks. 

However, the following top large cap funds have consistently delivered impressive returns, even in fluctuating market conditions.

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How Do Large-cap Mutual Funds Work?

Large-cap mutual funds invest a minimum of 80% of their assets in stocks of companies with large market capitalizations.

Here, the investments specifically include those ranked among the top 100 on Indian stock exchanges. 

These companies are typically industry leaders, known for their stability, established track records, and ability to withstand market volatility.

The fund house can diversify the remaining 20% into other types of securities like stocks, debt instruments, or government securities.

This strategic allocation helps manage risk while enhancing potential returns.

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Who Should Invest In Large-cap Funds?

Investing in large-cap funds gives you exposure to well-established, financially sound companies with a proven ability to deliver consistent growth. 

This makes them an attractive option for conservative investors. 

Large-cap funds are suitable for long-term capital appreciation & possess relatively low-risk compared to mid or small-cap funds.

Large-cap funds can be a viable option if you are looking for investments that are less volatile.

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Tax Implications For NRIs Investing In Large-cap Mutual Funds

As an NRI, it is necessary to note that capital gains realized during the redemption of mutual funds attract taxes and Tax Deducted at Source (TDS) is applicable on the funds based on

• Type of fund
• Period of holding
• Residential status

Large-cap funds fall under the category of equity-oriented funds as they predominantly invest in stocks.

A Long Term Capital Gains Tax (LTCG) of 10% is levied on your investments held in a large-cap fund

• If your holding period is more than 12 months
• If your capital gains earnings exceeds INR 1,00,000

Note: As per the Budget 2024, from the financial year 2024-25, the LTCG tax deducted at source will be 12.5% provided the capital gains exceed INR 1,25,000.

A Short Term Capital Gains Tax (STCG) of 15% is levied on your investments held in a large-cap fund if the period of holding is 12 months or less.

Note: As per the Budget 2024, from the F.Y 2024-25, the STCG tax deducted at source will be 20% 

A Securities Transaction Tax (STT) of 20% (deducted at source) is applicable on receipt of any dividend.

Also, with the introduction of Double Taxation Avoidance Agreement (DTAA), you won’t be taxed again in the country of your residence on the receipt of capital gains in India.

Claiming DTAA benefits can impact the taxation of your NRI investments. Read more on our blog here about How To Claim DTAA Benefits While Filing ITR For NRIs?

How To Claim DTAA Benefits While Filing ITR For NRIs?

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Conclusion

For NRIs seeking a balanced and secure investment option in the Indian market, large-cap funds stand out as a compelling choice. 

These funds offer a blend of stability, growth potential, and lower volatility, making them ideal for long-term financial goals. 

While they may not match the higher returns of small or mid-cap funds, their resilience in fluctuating market conditions provides peace of mind.

Large-cap funds focus on well-established companies with strong market presence to invest in reliable & industry-leading businesses. 

This, coupled with the liquidity they offer, makes them an ideal choice for your core investment portfolio. 

Lastly, it its advisable to conduct thorough research or consult a financial advisor to align these investments with your specific financial goals.

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Large Cap Mutual Funds: Frequently Asked Questions (FAQs)

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Can USA NRIs invest in mutual funds?

Yes, the Foreign Exchange Management Act (FEMA) Act, 1999, allows NRIs to invest in Indian mutual funds. 

However, the NRIs living in the USA need to comply with the Foreign Account Tax Compliance Act (FATCA) guidelines when investing in these funds. 

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Which large cap fund is best for NRI in 2024? 

The following can be among the best large cap fund you can consider investing in,

• Nippon India large-cap fund
• ICICI prudential bluechip fund
• HDFC top 100 fund growth
• Kotak bluechip growth
• Invesco India Largecap Fund

‍Note: It is advisable to seek the help of a professional before you consider investing in the large-cap funds.

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Who manages the large-cap equity funds?

The large-cap fund is managed by a fund manager who is responsible for overseeing the investment portfolio of a mutual fund.

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Why should I consider large-cap funds as a potential investment?

Generally, a large cap fund generates high returns, provides stability and liquidity, and has the ability to beat its benchmark index. 

The volatility within a large-cap fund is comparatively lower than a mid or small-cap fund which ensures that your investment carries lower risk.

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Can I invest in large cap mutual funds through a SIP?

Yes, you can invest in large cap mutual funds through a Systematic Investment Plan (SIP). 

The seamless SIP options can be easily set up, making regular investing effortless and establishing disciplined investing.

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