Wealth managers believe first-time investors and those moving money from fixed deposits should stick to large-cap funds as these schemes invest in companies with long track records and strong managements, which works well in the long term.
WHAT IS A LARGE-CAP MUTUAL FUND?
As per regulatory guidelines, a largecap company is a listed company ranked from 1st to 100th on the Indian stock exchanges in terms of market capitalisation. Hence for a fund house, a large-cap scheme needs to invest at least 80% of its corpus in large-cap companies, with the flexibility to invest the remaining 20% in other companies as per the discretion of the fund manager.
HOW MANY LARGE-CAP FUNDS ARE AVAILABLE?
As of October 2024, there are 32 large-cap schemes with 15.2 million folios managing assets worth `3.68 lakh crore. This is the fourth-largest category among equity mutual funds.
WHERE DO THESE FUNDS SCORE?
Large companies score due to their promoter strength, large pool of talent with experience, and presence in the business for a longer time. Many companies are tracked by both Indian institutional as well as foreign investors. Hence, there is higher transparency and availability of reports on the performance and outlook of these companies in the public domain. Since these companies are large, they can attract strong financial institutions and have the relevant skills and bandwidth to deal with tough economic environments and scenarios in a far better way than smaller companies. From a stock market perspective, such companies are more stable and have visibility of earnings with longevity.
WHO SHOULD OPT FOR A LARGE-CAP FUND?
Large-cap funds are ideal for investors who seek steady returns with relatively lower risk and have a time horizon of five years and above. Typically, a large-cap fund or an index fund that is largecap oriented should be part of the core portfolio holding of every investor, with the satellite portion going to thematic or mid/small-cap funds. Financial planners believe investors moving from fixed deposits or new to equity mutual funds and are uncomfortable with volatility should only start with large-cap funds. Conservative investors could own large-cap funds and avoid mid- and small-cap funds
WHAT IS A LARGE-CAP MUTUAL FUND?
As per regulatory guidelines, a largecap company is a listed company ranked from 1st to 100th on the Indian stock exchanges in terms of market capitalisation. Hence for a fund house, a large-cap scheme needs to invest at least 80% of its corpus in large-cap companies, with the flexibility to invest the remaining 20% in other companies as per the discretion of the fund manager.
HOW MANY LARGE-CAP FUNDS ARE AVAILABLE?
As of October 2024, there are 32 large-cap schemes with 15.2 million folios managing assets worth `3.68 lakh crore. This is the fourth-largest category among equity mutual funds.
WHERE DO THESE FUNDS SCORE?
Large companies score due to their promoter strength, large pool of talent with experience, and presence in the business for a longer time. Many companies are tracked by both Indian institutional as well as foreign investors. Hence, there is higher transparency and availability of reports on the performance and outlook of these companies in the public domain. Since these companies are large, they can attract strong financial institutions and have the relevant skills and bandwidth to deal with tough economic environments and scenarios in a far better way than smaller companies. From a stock market perspective, such companies are more stable and have visibility of earnings with longevity.
WHO SHOULD OPT FOR A LARGE-CAP FUND?
Large-cap funds are ideal for investors who seek steady returns with relatively lower risk and have a time horizon of five years and above. Typically, a large-cap fund or an index fund that is largecap oriented should be part of the core portfolio holding of every investor, with the satellite portion going to thematic or mid/small-cap funds. Financial planners believe investors moving from fixed deposits or new to equity mutual funds and are uncomfortable with volatility should only start with large-cap funds. Conservative investors could own large-cap funds and avoid mid- and small-cap funds
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