What are large cap Mutual funds?
Large cap funds invest the major portion of assets in those companies which have large market capitalisation. Being trustworthy, reputable and strong, the companies have solid track records and are counted in the best players in the economy to promote higher development. The companies which are ranked from 1st to 100th in terms market capitalisation are called large-cap companies and the mutual funds which invest more than 80% of their corpus in the stocks of large cap companies are called large cap mutual funds. With strong corporate governance, these companies are highly followed and well-researched and thus hold a notable position in the market to run the economy in a greater manner. Large cap mutual funds invest the money in the shares of such companies and generate wealth for the investors slowly and steadily over a long term.
Large cap funds are considered to be the safest investment plan in the long run as the funds are invested in the strong market players and have fewer chances to get devalued. The investors must have the top stocks in the portfolio to ensure a higher degree of returns on their investments and make profitable earnings to create wealth and fortune.
Top 10 Large Cap Funds To Invest Online in India
- Kotak Standard Multicap Fund (G)
- SBI Bluechip Fund (G)
- ICICI Prudential Bluechip Fund (G)
- Mirae Asset India Equity Fund (G)
- Reliance large Cap Fund (G)
- Aditya Birla Sun Life Focused Equity Fund (G)
- Motilal Oswal Focused 25 Fund-Reg(G)
- SBI Large Cap Fund (G)
- Tata Large & Mid Cap Fund (G)
- Invesco India Growth fund (G)
Large Cap Mutual Funds Investment - Things an Investor Should Consider
- Financial Goals : Large cap mutual funds provide a reasonable exposure to equities without much erosion to the value of the portfolio. Since the risks are kept at an acceptably low level, they are an ideal venture for risk-averse but money-grubbing investors. However, the condition, as specified above, shall be that he or she must be willing to stay put for a long period. Thus, you may invest in large cap mutual funds as a part of a good retirement plan, or if you are a budding investor and want to play safe with equities, you can make a great start with large cap funds.
- Cost : Large cap mutual funds charge a particular sum of money, known as the expense ratio, which they take for managing your investments. It is normally presented as a percentage of the assets under management of the fund and determines its operating efficiency. As per the guidelines issued by the mutual fund governing board, SEBI, the upper cap decided for the expense ratio of a largecap fund is 2.50%. As the returns yielded are lower than what is yielded by small and mid-cap funds, investing for a long period in a fund that has a lower expense ratio will fill in for the underperformance of the fund. Hence, you should keep a close watch on the fund’s expense ratio and should also compare it with the yield produced, before stuffing your money in it.
- Investment Horizon : A golden rule that has to be always followed while stepping into the world of mutual fund investing is that there are no free lunches and nothing happens overnight. In other words, you can’t expect to earn rewards without experiencing some risk, and it may take a while before your fund starts to show some improvement in earnings. Hence, if you are picking up a top large cap mutual funds for your portfolio, then you should be ready to stay invested at least for five years. Since they have a relatively lower grade of earnings, you may need to stick around for some time to earn satisfactory returns. Also, there is a significant underperformance witnessed by the large cap mutual funds in the situation of market slumps, which may take a while to recover and get geared for higher returns in the rally period.
How does Large Cap Mutual Funds works?
There are innumerable AMCs (Asset Management Companies) operating in the market. The AMCs gather the money of the investors through the schemes. The pooled up amount is then invested in the Large cap companies of the stock exchange. You might be thinking the AMCs are doing the same task as an individual investor. But, no! There is a difference. An individual investor mentioned in the above-stated example can buy only a few units of a single listed company. Unlike, an individual investor, the AMC can gather an enormous amount by the way of pooling up. Thus, it can diversify the investment and at the same time ensures a significant return to the clients.
The investors can invest the amount according to their capacity. Also, the client gets two options through which the money can be invested in any of the scheme namely, SIP and Lumpsum. The decision of choosing the investing methodology entirely depends on individual clients and their investment goals. For example, if the client has the habit of following a budgeted plan for revenue and expenditure, then SIP would be the best option.
How to Choose Your Top Large Caps Funds?
Whenever investing in mutual funds, the most important things to keep in mind is the risk and the returns, followed by their relationship. If the fund is paying huge rewards, then you should also check if it is at the cost of high risks. If the risks are high and the rewards are not remotely close to the level they should be at, then it is better to dodge an investment in that fund and look forward to better prospects available in the market. Let’s have a further discussion on these two attributes while deciding to invest online in best large cap mutual funds:-
Risk : Although not as high as compared to the lesser established funds like small and mid-caps, the risk is there in large cap funds too. The reason for controlled exposure to the risks under large cap mutual funds is that NAVs do not fluctuate as frequently as in the case of small-cap and mid-cap funds. Their relatively stable nature, acquired due to investment in stocks of established companies, adds stability, and security to your portfolio. However, though the protection provided here maybe more, the returns earned are relatively lower than what are earned by the mid-cap and small-cap funds.
Returns : An investor should not expect returns which are greater than, or even equal to, the returns provided by mid and small-cap funds. The returns, however, will be stable and may not reach higher grounds even in bullish markets. The reason for relatively lower payments from large cap mutual funds is that they incorporate stocks of companies that have already progressed enormously in the market. Hence, the chances of further acceleration are lower in comparison to other category funds. However, the companies in which the investment is made have a vast potential of further expansion, which may provide lucrative opportunities in future and may add up more wealth in your corpus.
The past five-year record of funds reveals that the returns aren’t drab, and one can confidently commence investment in large cap funds without having to worry much about the paybacks. The best results produced by the top funds returns worth 21.64%, whereas the average yield to date is floating around 25%
Hence, large cap mutual funds are best suited to risk-averse investors, who are willing to invest in high-quality equity stocks and have a long-term investment goal.
Major Advantages of Best Large Cap Mutual Funds Online Investment
Being the active performers in the economy, companies tend to provide several benefits to the investors. In the case of online investment in best large cap MF, there are some additional advantages being represented which are as under:
- Diversification :- Top large cap funds are broadly diversified in different sectors which include finance, chemical, pharmaceuticals, technology, etc., and tend to reduce the risk exposure to a particular sector or company. With this, the best large cap mutual funds to invest online in India assure greater returns and higher benefits for their financial growth over a period of time. You can also calculate returns with the help of powerful tool known as sip return calculator.
- Research & Valuation :- The research and valuation of the big and giant companies can be procured by the investors easily because of the perpetual succession of the companies. The profitability and potential of the companies to provide prolific growth can be ascertained by the investors by analysing the financial statements. Accordingly, large cap mutual funds in India are made after in-depth research and analysis of the business activity to determine the accurate valuations.
- Dividend Payouts :- Another benefit of investing in large cap is their potential for stable dividend payments. The stock prices for these companies are not slated for high rates of growth over time as they have already reached their peak level and have established a notable position in the market. As the growth prospects are quite low in these funds, the companies tend to offer regular dividends to compensate the investors. These dividends lead to comprehensive returns for this funds investors and can be accumulated to create riches.
- Stability of Growth :- The risk factors are moderate and the returns can be predicted as per the performance of the market and industries in which funds fall. The greatest advantage of adding these stocks in one’s portfolio is the consistency they provide over a period of time. Because of the well establishment of the companies, they are less prone to the market fluctuations and thus help in fetching consistent growth.
- Quality of Management :- Due to the high-quality management of the companies, best online large cap funds provide the benefit of effective control and efficient earnings. This helps in attaining higher growth of the capital and accomplish the goals of investing.
By providing the online services of investing in the SIP or lumpsum plans of best performing large cap mutual funds schemes in India, we assist you in making convenient and smart mutual fund investments in India.