What are large cap mutual funds?

Are you among those who have a low level of risk tolerance, but looking for mutual fund investment plans that give you good returns? Then large-cap mutual funds are an excellent choice for people like you. These are the type of equity mutual funds with large market capital capable of generating a steady flow of wealth in the long run for investors. This category of funds mainly invests in companies with large market capitalization. Choose large-cap funds if you are a first-time mutual fund investor because of its low-risk factors and proven ability to generate wealth in the long term. Let’s check what large-cap mutual funds looks like.

Large-cap mutual funds

As the name suggests, large-cap funds are a type of mutual funds that invest a major portion of is corpus in large companies. These companies are often reputable and trustworthy with large market capitalization. Also described as Blue Chip funds, these are open-ended equity mutual fund schemes in which a major portion of its corpus invests in equity or equity-related instruments of companies with large market capitalization. The market capitalization of such companies ranges between Rs.200 billion and Rs.3500 billion. Such companies have great practices for corporate governance and capable of building wealth slowly but steadily for their investors in the long run.

A stable source of income

An investor should ensure to spread his investments while building his or her mutual fund portfolio. If you are efficient and experienced, you should try to integrate both large-cap and small-cap funds in order to build up a great investment portfolio. Investing in large-cap funds is safe because such companies are large and reputed. Unlike mid-cap and small-cap companies, these large-cap companies are stable, and, less likely to face an economic or business situation that forces them to become insolvent. As per the new categorization norms of SEBI, the large-cap funds need to invest a minimum of 80% of its assets in top companies based on market capitalization.

Consider large-cap funds if you are looking for long-term investment. This fund is also suitable for those who prefer to keep away from the risks involved due to the sudden changes in the stock market. You can expect a regular flow of dividends by investing in large-cap funds as a stable source of income. And the best advantage of this fund that it protects against inflation. It is suitable for investors with a low-risk appetite.

Who should invest in large-cap funds?

Large-cap funds are one of the most preferred choices for many retirees and old-age groups because of the benefits that it offers. These funds are less risky but have the potential to offer consistent returns as dividends. Since most of the corpus invests in equity and equity-related instruments of stable companies, these funds are less aggressive. You can generate wealth without high volatility by investing in large-cap funds.

The fund managers of large-cap mutual funds select the right companies to invest their corpus from different market stocks using their discretionary power and manage investor’s fund actively. They have the authority to make changes based on the various stock market conditions. Compared to other equity fund schemes, large-cap funds have more potential for growth and generate immense profit. Besides, these funds can outperform many other mutual fund choices. It is practical to invest in large-cap funds even in volatile times.

People prefer investing in large-cap funds in their investment portfolio because of the stability that it offers. These are equity mutual funds invest in companies with a market capitalization of more than 1000 crore. Excellent track record and well-established reputation among customers certainly make large-cap funds an excellent investment choice. Lower-risk, guaranteed average returns and capital appreciation are great attractions of large-cap mutual funds.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh