For years, large-cap mutual funds were the default choice for long-term investors seeking stability. But as market swings have grown sharper, a new question is gaining urgency: is pure equity still the smartest way to invest?
Hybrid multi-asset funds, which balance equity with other asset classes, are increasingly matching and in some cases beating large-cap returns, while exposing investors to less volatility along the way.
What are large-cap and hybrid multi-asset mutual funds?
Large-cap mutual funds invest almost entirely in established, high-market-cap companies and tend to move closely with broader equity indices. Their performance is closely tied to market cycles, which means gains during rallies and declines during corrections.
Hybrid multi-asset funds, on the other hand, allocate money across equities and non-equity instruments such as debt and commodities. The idea is to reduce the impact of market swings while still participating in equity upside, making these funds relevant for investors who prioritise stability alongside growth.
How hybrid funds have matched large-cap performance
Two funds were picked using the Financial Express mutual fund screener, based on the highest long-term returns delivered within their respective categories. Nippon India Large Cap Fund was picked from the large-cap equity category, while Quant Multi Asset Allocation Fund was selected from the hybrid multi-asset allocation category, with the comparison anchored to five-year annualised returns to ensure consistency across market phases. The comparison is anchored to five-year annualised returns to account for different market phases rather than short-term movements.
#1: Quant Multi Asset Allocation Fund – Direct Plan
Quant Multi Asset Allocation Fund follows a hybrid multi-asset strategy, investing across equity and non-equity instruments. Equity exposure is lower than that of large-cap funds, at around 39.6%, with the rest of the portfolio spread across other asset classes.
As of December 16, 2025, the fund’s NAV is Rs 166.27, its AUM stands at Rs 4,182 crore, and its expense ratio is 0.67%. Over the past five years, the fund has delivered a CAGR of 26.82%, despite its lower equity allocation.
Within equities, the portfolio has a high allocation to financial stocks along with exposure to select industrial and power-related companies.
The largest holdings include State Bank of India (7.23%), Premier-Energies (5.19%), Jio Financial Services (3.68%), HDFC Life Insurance (3.07%) and ICICI Bank (2.95%).
Over shorter and longer periods, the fund has returned 12.15% over one year, 21.81% over three years, 24.36% over seven years, and 18.69% over ten years, while its since-inception return stands at 24.25%. All returns over one-year are compounded annualised – CAGR.
The portfolio turnover ratio of 159.93% shows frequent changes in positioning. The fund reports a Sharpe ratio of 1.34, which means it has delivered more return for each unit of risk taken. The scheme is managed by Ankit Pande, Sanjeev Sharma and Sandeep Tandon.
#2: Nippon India Large Cap Fund – Direct Plan
Nippon India Large Cap Fund is a pure equity large-cap scheme, with about 99.6% of its assets invested in equities.
As of December 16, 2025, the fund’s NAV is Rs 104.48, while its assets under management stand at Rs 50,312 crore, with an expense ratio of 0.66%.
The portfolio is concentrated in large, established companies, led by banking and financial services, which account for more than half of sector exposure, followed by information technology and select industrial stocks.
Over the past five years, the fund has delivered a CAGR of 21.43%.
The fund’s largest holdings include HDFC Bank (9.09%), Reliance Industries (6.09%), ICICI Bank (5.54%), Axis Bank (3.97%) and State Bank of India (3.81%).
In terms of returns across time periods, the scheme has delivered 4.68% over one year and 19.66% over three years, while its since-inception return from January 2013 stands at about 16.4% annualised. All returns over one-year are compounded annualised – CAGR.
The portfolio turnover ratio of 75.69% points to a relatively steady portfolio. The Sharpe ratio of 0.72 points to a relatively lower return compared to the risk taken incurred by the fund.
The scheme is managed by Sailesh Raj Bhan and Bhavik Dave.
Large-cap vs hybrid mutual fund: Who should consider which fund type?
Large-cap and hybrid funds suit different types of investors because they behave differently when markets rise and fall.
Large-cap funds are built almost entirely around equities, which means returns tend to track market moves closely. This makes them better suited to investors with a long time horizon who are willing to stay invested through sharp market declines without reacting to short-term losses.
Hybrid multi-asset funds, by contrast, split money across equity and non-equity instruments. This usually results in less variation in returns, especially during market corrections. Such funds tend to suit investors who want equity exposure but prefer a steadier experience, particularly those investing through SIPs or those who may exit during prolonged market declines. These funds can be relevant for investors using systematic investment plans or those who tend to exit during prolonged market declines.
Investors’ takeaway
The data comparison shows that strong returns are not limited to pure equity exposure. While large-cap funds continue to suit investors who are comfortable staying invested through market swings, hybrid multi-asset funds have shown that a diversified approach can also deliver competitive returns over long periods. The decision depends less on category labels and more on an investor’s time horizon, behaviour during market stress, and ability to remain invested through cycles.
In conclusion, these are two different types of funds that are suited for different investment objectives. And hence, a head-to-head comparison that does not factor in the person’s profile and also tax implications could be misleading. So, when you get to evaluating if a large-cap or a multi-asset fund is right for you, be sure to factor in everything.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.
