Large Cap Funds the Largest Of All!

Sizes have some relevance in the world, when you go to try a dress, aren’t you thankful that there are different sizes available!

So is in the case of investing, especially in the case of a mutual fund investment. There are different types of mutual funds such as large, mid, and small cap funds as per market capitalisation and each has a distinct role to play in your portfolio.

Most mutual fund advisors suggest investors to stay invested in large cap mutual funds in times of volatility. As you may know, large cap mutual funds invest in very large companies. As per Sebi norms, these schemes are mandated to invest in top 100 companies by market capitalisation. A large cap fund is a mutual fund that invests at least 80% of its corpus in large cap companies. These large companies fare better in a volatile market as these companies may be market leaders.

Wondering what a large cap fund can offer you?

There is a reason why large cap companies are called the lions of the jungle. Investing in a large cap equity fund can offer several benefits, such as:

1. You get exposure to large, well-established businesses: When you invest in a large cap equity fund, your money is invested in some of the biggest names in the market. Large cap funds focus on quality businesses with the potential to grow more in the future. These funds follow the philosophy of GARP (Growth at a Reasonable Price Philosophy) and invest in businesses with high earnings and greater future potential.

2. You gain from comprehensive sector allocation: Your money is invested across different sectors depending on the large cap fund you choose. An average large cap mutual fund can invest in sectors like computer software, banking, crude oil and natural gas, telecom services, infrastructure, cars and multi utility vehicles, drugs and pharmaceuticals and more.

3. You get mild exposure to small and midcap fund stocks: Large cap mutual funds also invest in small and midcap companies. Even though the concentration is low, you still get to diversify your portfolio and improve your returns.

4. You may earn good returns over time: Large cap equity funds can deliver relatively good returns over a long duration. Large cap companies are comparatively more stable and are able to ride out volatility and extreme market conditions. So, the chances of suffering losses in the case of a market downturn are low.

It is important to note that equity funds are usually viewed as long term mutual funds in India. If you are looking for relatively safer mutual fund category, you should consider investing in large cap funds.

Here are few best performing Mutual Funds from this category:

*Data as on 26^th April, 2022

You can invest in large cap equity funds if you have a high risk appetite and a long term ahead of you. They can be ideal for long-term growth and deliver relatively good returns while shielding you from extreme market volatility and economic downturns by investing in fundamentally strong and established businesses. However, as with all mutual funds, you must go through the portfolio of a mutual fund and check the fund manager’s credentials, the fund’s expense ratios, exit loads, and other similar aspects before settling on a suitable large cap equity fund.

To know more 

You can also use GIIS Financial tools or Our Android App  for Investment, tracking and Asset allocation planning. 

*Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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