Best large cap Funds to Invest
When people think mutual funds, they usually think ‘equity’, well, they’re not entirely wrong. There are debt-oriented mutual funds and there are equity-oriented mutual funds. Equity mutual funds are grouped based on company size or what is commonly known as ‘market capitalisation’ (market-cap). Market capitalisation simply explained, is the total value of a company based on its stock price. It is calculated by multiplying the total outstanding shares of a company with its current stock price. There are 3 broad market-cap groups, they are: large-cap, mid-cap, and small-cap.
Large-cap companies are the oldest and biggest corporate names in India and they’re listed in the top 100 of the country’s stock exchanges. They’re companies which have a strong market presence and sound corporate-governance policies. These companies are under constant scrutiny by market-watchers, experts and finance advisers.
Mutual fund portfolios which have a heavy composition of large-cap companies’ stocks are called large-cap Mutual Funds. According to recently revised SEBI norms, fund houses are required to have a pre-required ratio of stock in individual fund portfolios. Which is why you as an investor will find not only pure large-cap funds but also multi-cap portfolios (mix of large, mid & small cap) and large-cap & mid-cap portfolios.
Many investors prefer investing in large-cap companies because of their reputation and inherent trust. Realistically, large-cap funds are for investors who are looking at consistently high returns with minimum risk. One important thing to note, if you’re interested in choosing a large-cap mutual fund, we recommend you set realistic and long-term financial goals.
The best large-cap funds will give you returns in the range of 8%-11%, on your investment. This figure is still higher in comparison to other investment options. Moreover, investing in these funds reduces your risks arising out of direct exposure to stock markets. Since the stock prices of these companies is already high, the NAV of these do not fluctuate much. These funds usually have regular dividend payouts and are less erratic when markets become unpredictable or temperamental. In fact, according to a December 2018 report, large-cap funds gave returns of as high as up to 11% even though markets were turbulent in 2017-2018. We at Angel BEE have curated a list of top large-cap funds for you to invest in 2019.
large cap Mutual Funds:
The best large-cap mutual funds are those which lean heavily toward stocks of large-cap companies. These companies are ranked among the top 100 in India’s stock exchanges. Since the companies in this list are huge by size (₹ 20,000 and above) and have a strong influence over markets, they ensure that their investors not only get steady, consistent returns, but also regular dividends. The past performance of these funds is usually less erratic and you as an investor will not have to bear huge losses on your investment.
We understand each investor’s financial goal and risk-bearing capacity is not the same. For new investors, the best large-cap funds are a good opportunity to get introduced to the stock market. If you have a low appetite for risk and are looking for a safe investment option, then these funds are great for you.
These funds have an excellent performance history and can recover losses over a period. We recommend you not redeem your investment after the lock-in period of 3 years ends. Holding your large-cap investment for 5-7 years will give you the best returns and will adjust for any losses arising out of market slumps. You will also see less volatility in your portfolio over a longer period. These are our recommendation of large-cap funds which are performing well:
Multi-Cap Mutual Funds:
Multi-Cap funds are like reversible jackets, they are beneficial yet protect you from unpleasant elements. As the name suggests, multi-cap funds are portfolios which have a mix of large, mid & small cap funds. The best large-cap funds give you steady growth, but multi-cap funds give you dynamism. If you opt for a multi-cap portfolio, you’ll have the protection of lower risk from large-cap stock and get returns arising out of growth opportunities that mid & small cap stocks experience.
Each multi-cap fund has a unique strategy, some are heavily tilted toward large-cap stocks, while others have a larger composition of mid & small-cap stocks. Most multi-cap funds begin with a top-heavy large-cap group of stocks and gradually taper toward the other market-cap sizes. The idea behind this strategy is to look for stability and long-term investment holding.
According to market experts, it takes a minimum 1.5-2 years for any company to recover from a downturn in markets. It takes as much time for a new company to get its feet off the ground. Exiting any fund, especially a multi-cap one focused on large-cap stocks, within 3 years is not always prudent. You need to have a realistic long-term investment goal of at 5 years if you opt to invest in these type multi-cap funds. Here are Angel BEE’s best Multi-Cap recommendations:
Large & Mid Cap Mutual Funds:
Large & mid cap fund portfolios comprise of stocks which listed among the top 250 in Indian stock exchanges. Investors get safety and stability from large-cap stocks and get a chance to profit from the growth potential of mid-cap stocks.
According to new guidelines from SEBI fund houses are required to allocate a minimum 35% of a fund’s corpus to large-cap stocks and at least 35% to mid-cap stocks. Some market experts feel this could hurt an investor’s investment. However, the reasoning behind this regulation is, mutual fund investors get more exposure.
Fund advisors are of the opinion that a mixed portfolio with more large-cap stocks may become too conservative and one with more mid-cap stocks may become too risky. The best thing for you to do as an investor is to understand each portfolio composition. Your tolerance for risk is tested when you invest in mixed bag portfolios. The best large-cap funds are curated to align with your risk appetite and financial goals. Here’s a look at our recommendations of large & mid-cap funds:
Top large-cap Mutual Funds to Buy:
If you are a conservative investor but still want good returns, we recommend investing in the best large-cap funds. large-cap funds are the best way to create and compound your wealth, your dream-home or dream-vacation can now become a reality.
Large-cap stocks are more stable and give high returns if held for a longer period. These are less volatile in times of market spirals and are quicker to recover from market corrections. Given how the Indian stock market has been fluctuating in the past few months, many fund managers are recommending investors to invest in these stocks.
Some large-cap portfolios will have a mix of mid-cap stocks as well. The NAV of large-cap stocks fluctuates relatively lesser than mid-cap stocks even during major market changes or movements. This mitigates any losses on your portfolio and makes your investment safer as well as profitable. Here’s Angel BEE list of Top large-cap Funds to buy:
Factors to Consider Before Investing in large-cap Mutual Funds:
Here are some things you should consider before investing in the best large-cap funds:
Fund Rating: It is always recommended to opt for top-rated large-cap funds for best performance. Factors like the age of the fund, its stock allocation, and past performance are key factors in determining its rating.
Expense Ratio: The expense ratio includes brokerage costs, fees charged by fund houses and percentage change in NAV. The NAV of large-cap stocks does not fluctuate as much as others, which is why the best large-cap funds have less expense ratio.
Past Performance: Reviewing past performance of any mutual fund is crucial before considering putting your money in it. The funds will have sound track-records and consistently good performance. This includes previous market movements especially, how the fund performs in different market situations (bullish or bearish).
Research Individual Companies: Some investors prefer researching companies before investing in them. This helps you evaluate their reputation and influence in the market. It also helps you make calculated decisions before putting your money in.
Your Investment Objective: To get the best returns on your large-cap fund investment, you need to have a broader investment horizon. It is recommended to hold your investment for at least 5-7 years before you exit from it. Also, setting clear and realistic investment milestones will impact your decision to hold or exit from your investment.
Evaluate Your Risk Appetite: You should be able to understand how much risk you can afford, before investing in any equity-oriented fund. The best large-cap funds are the least risky and are suited for investors who have a low appetite for risk.