Investing can sometimes really be massive and overwhelming, especially when you need to choose from a sea of options for investment. Among these options, Large Cap Mutual Funds are popular options among the investors because of its reliability.

These mutual funds generally invest in large companies that are stable and successful making them safe and reliable for new investors also.

In this article, you will explore what are these, their characteristics and benefits and top performing funds.

What are Large Cap Mutual Funds?

Large Cap Mutual Funds are the type of mutual funds that generally invest in large cap stocks. This investment fund makes investments in large companies that are stable, secure, well-settled and best in their respective sectors.

These large companies normally have a market capitalization of $10 billion or more. Investing in already well established companies is less risky and reliable as compared to small companies.

These funds are the part of equity funds and beneficial for the investors who are seeking for long term growth in capital in a stabilized manner.

Characteristics of Large Cap Mutual Funds

There are many characteristics of these funds that set them apart from other types of investment funds.

Listed below are some characteristics of large cap mutual funds that will increase your understanding of these equity funds.

Investment in Large Companies

These funds generally invest in large cap companies for secure and stable growth compared to small companies. Investing in these companies has reduced risk as they are already well-known.

Stability and Reliability

Large-cap stocks are generally more stable and reliable than small-cap stocks as small-cap have a chance of failure but large cap stocks are already successful.

Diversification

The portfolio of these investment funds typically includes diverse sectors to invest in and is not overly dependent on an individual industry.

Moderate Growth Potential

These funds may be more secure and stable than small cap funds, but their growth is slower and you can expect only a moderate returns over time.

Liquidity

Large cap funds show more liquidity which means they can be bought and sold easily without affecting their original price.

Professional Management

These funds are managed by professionals who conduct thorough research and analysis and select the stocks in the fund.

Income Generation

Many large cap companies pay bonus from which the investors can make some extra income other than the investment returns.

Lower Risk Compared to Small and Mid Cap Funds

Although all investments come with some risks, investing in large cap companies is less risky due to their stability in the market.

Long Term Investment Horizon

These are really suitable for long investment duration as they provide steady and long term growth.

Benchmarking

Large cap funds are often compared to models that have a pursued benchmark, these help investors evaluate the performance of their investment.

Benefits of Large Cap Mutual Funds

After going through the basics of the large cap mutual funds you must want to know more about why you should choose these mutual funds.

Well, let me state some benefits of these funds to you:

Stability and Lower risk

These mutual funds are relatively more reliable and stable than small-cap and mid-cap funds, which makes them less risky also.

Diversification

These funds allow investors to invest in different sectors rather than a particular industry or company.

Potential for Steady Growth

Although large companies can not grow as small companies, they still have the potential for steady growth in the long term horizon.

Income Generation

Investors have a chance to generate extra income from these companies other than returns as many large cap companies give bonuses.

Professional Management

Investors can gain access to professional fund managers easily who manage their funds for them to make higher returns.

Lower Expense Ratios

Many large-cap stocks have lower expense ratios compared to small cap stocks which are actively managed every time.

Accessibility

Large cap funds provide access to different investment securities and financial institutions to their investors, making it easy for them to invest in it.

Best Large Cap Mutual Funds in India

If you want to know which large cap fund is the most popular and trending in India, check out the list given below of the top 5 best-performing large cap mutual funds:

ICICI Prudential Bluechip Fund

It has a fund size of Rs 68,034 Crs.

It has a 5-star value research fund rating.

Its 3-month return is 7.86% and its one-year return is 11.48%.

Its expense ratio is 1.43%

Nippon India Large Cap Fund

It has a fund size of Rs 39,677 Crs.

It has a 5-star value research fund rating.

Its 3-month return is 8.79% and its one-year return is 10.46%.

Its expense ratio is 1.54%

HDFC Top 100 Fund

It is known for its consistent performance.

It has a 5-star value research fund rating.

Its 3-month return is 6.24% and its one-year return is 8.71%.

Its expense ratio is 1.61%

DSP Nifty 50 Equal Weight Index Fund

This fund comes under a regular mutual fund plan.

It has a 5-star value research fund rating.

Its 3-month return is 7.62% and its one-year return is 9.15%.

Its expense ratio is 0.92%

Invesco India Large cap Fund

This fund provides a good potential for growth.

It has a 4-star value research fund rating.

Its 3-month return is 9.09% and its one-year return is 10.78%.

Its expense ratio is 2.07%

How Risky Are Large Cap Mutual Funds?

Large Cap Mutual Funds are generally known to be less risky as compared to small cap and mid cap mutual funds. However, no mutual fund comes with a zero-risk rate.

Listed below are some risks that you can face when investing in these funds:

Market Risk

This means that the value of the funds can be affected because of the market conditions.

Sector Risk

This risk can be faced by the investors who invest in a specific sector only and do not apply diversification in their portfolio.

Concentration Risk

Though these funds are diversified, they may be centered on a specific company, which will affect the fund if the company faces failure.

Interest Rate Risk

Changes in the interest rate can affect the fund values, especially for the companies that borrow from others.

Economic Risk

Changes in the economic cycle will definitely affect the growth of the funds as large cap funds are sensitive towards this cycle.

Inflation Risk

This risk can destroy the purchasing power and make a impact on consumer’s spends, which will effect the overall growth.

Long-term Investment Horizon

Large cap stocks are less risky but they are still best suited for the long term growths more.

Conclusion

In short, Large Cap Mutual Funds are highly suitable for investors who want a safe, secure, well-established and stable growth with good risk management over the years.

These mutual funds provide you with the choice of two investment plans, SIP (Systematic Investment Plan) and Lump-sum Investment Plan. Users can choose if they want long term growth or short term growth.

These large cap funds are highly recommended to the ones who want a steady and stable but a long term consistent growth.

Aman Ved

Aman Ved

Aman Ved

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