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Who should Invest in Large Cap Mutual Funds?

Who should Invest in Large Cap Mutual Funds?

Last Updated : March 7, 2020, 5:04 p.m.

Large Cap Equity Funds are those mutual funds that invest a large proportion of their corpus in the stocks of companies having high market capitalization. These companies are established and well-known entities, which do not show signs of extreme volatility, as may be the case with small-cap and mid-cap companies. As these funds are relatively less volatile than small cap equity & mid cap funds, the returns are also moderate.

As they say, “Higher the risk, the higher the return.” But as we stated earlier, large cap funds give average returns as compared to other volatile schemes. Thus, logically, the risk associated with large cap equity fund is also moderate. This is a cheer up for all the cautious investors out there who have a moderate risk appetite and want decent returns. Since this is an equity investment, the investor’s investment horizon should be at least six to seven years to generate considerable returns.

Several fund managers have recommended large cap funds as a good investment avenue. Even during market lows, it sails smoother than other equity funds. This is because of the companies that large cap funds invest in. They have been in the business for quite some years with great performance over the years, so their stocks fluctuate less than other funds.

What are the advantages of Investing in Large Cap Funds?

Good Returns: Only if you are invested in large cap funds for a long period of time, then only will you be able to reap the fruits. Average 5-year return of large cap fund is around 9.74 percent, which can soar up during market high.

Risk: Investors that have a medium risk appetite can benefit the most out of large cap mutual funds due to its low volatility.

Endurance: Even in a bearish market, large cap schemes don’t suffer as much as the consequences you would have faced by investing in small cap and mid cap schemes.

Payout: One of the major advantages of large cap fund is regular dividend payout.

Recommended Large Cap Mutual Funds

Fund Name Rating Riskometer 1-year Return 3-year Return 5-year return
Reliance Large Cap Fund 5 star High 10.37% 12.73% 11.84%
ICICI Prudential Bluechip Fund 5 star Moderately High 6.24% 10.65% 10.45%
Mirae Asset Large Cap Fund 5 star Moderately High 9.25% 13.73% 13.68%

Note: All the data that has been mentioned in this article is sourced from Value Research as on July 18, 2019. All return data is in respect to Regular Plan.
Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing.

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