Large Cap Funds
Mutual funds are investment pools created based on several factors. They cater to varied investment objectives and risk-bearing capacity. The main reason why mutual funds are a preferred investment option is, they are safe and yet give high returns on investment. Mutual funds are the best way to create and grow your wealth in a systematic and timely manner. Mutual funds can be debt or equity-based and sometimes a combination of the two.
Equity funds or equity-oriented mutual funds are diversified portfolios comprising a proportion of individual stocks. Though each fund house offers a unique equity fund product, the broader grouping of company stocks is based on company size or ‘market capitalisation’.
Market-Capitalisation (or market cap) is the aggregate valuation of a company based on its current share price and the number of outstanding shares. It is calculated by multiplying the current market price of the company’s share with the total outstanding shares of the company. There are 3 main market-cap groups, large cap, mid-cap, and small-cap. Each group has different investment opportunities and associated risks.
Large-cap mutual funds are one of the safer investments in equities as they have good returns and are less volatile to market fluctuations, compared to mid- or small-cap funds. These funds select the top 100 stocks listed in India and the companies’ sizes are upwards of ₹20,000 crores.
Large-cap Investment Plans by Angel BEE:
Large-cap funds are those invest a larger proportion of their corpus in companies with a large market cap. These are old and well-established, with strong corporate-governance practices, and have generated wealth for their investors slowly and steadily.
These funds are ideal for conservative mutual funds investors as the portfolios have been known to be less volatile and more stable. Stocks of these companies tend to recover faster during market corrections and are overall consistent performers.
Market experts recommend a minimum investment horizon of 5-7 years to get maximum returns on investments. It is important for you to have realistic investment milestones when investing in large cap mutual funds. Here’s a look at some of our best Large cap Mutual Fund Plans:
Top Large cap Mutual Funds in India
Choosing the right large cap mutual fund is never easy. Some funds tend to perform well, while other funds tend to languish. There are quantitative and qualitative factors which determine the best ones. Quantitative factors include the age of the fund, it’s stock allocation or mix, past performance (at least 3 years) and net assets for a financial year. Qualitative factors tell you the reputation and track record, the investment process, and market presence. Most investors select the ones they trust, rather than general opinion. Overall, you must ensure, not only your fund have a sound track record but also create and compound your wealth. Here’s a review of the Top Large cap Mutual Funds in India.
Everything You Need to Know About Large cap Mutual Funds
Large cap companies are huge well-established corporate houses. Large cap mutual funds have diversified portfolios of stocks with steady growth and regular dividends. They give long-term returns with minimum risk to an investor. If you have a low appetite for risk and are not looking for quick money growth, these types of funds are perfect for you.
These funds have a lower expense ratio as compared to mid- and small-cap funds because the NAV of the stocks (in any portfolio) do not fluctuate as much as the stocks in the other two market-cap sizes.
Why Large cap Mutual Funds?
Cost Effective: Low expense ratios and relatively lower (in comparison) but steady returns on investment make investing in large cap funds cost effective. This and the recommended longer-term holding period (5-7 years), allows you to recover losses from under-performing stocks.
Longer Investment Horizons: The reason fund houses and market experts recommend a longer investment horizon for these funds is, at times based on previous evidence, some stocks have under performed during market slumps. The risks associated with underperforming or near stagnation portfolios usually gets mitigated over time when the market begins to recover.
Reach Investment Milestones: If you have realistic long-term financial goals like, buying a house or taking a long vacation, investing in these funds is ideal for you. Overall, they are a good way to plan your investments and slowly edge toward investment milestones.
Get Better Returns with Large cap Mutual Funds:
As an investor, you can always choose between relative stability and long-term growth of large cap funds, and potentially higher returns but even higher volatility of small-cap funds. Large cap mutual funds give moderate but steady returns owing to the type of asset allocation. Moreover, stock prices in these portfolios do not fluctuate as much in comparison. These factors make investments in these funds more stable and less risky. A longer investment holding period also ensures higher returns. *As of Dec 2018, some of these funds out performed the benchmark, giving a rate of return as high as up to 11%. This proves that even though markets were considerably volatile in 2018, these funds were less affected than others.