Among the whole equity universe, large-cap companies are the only safest bet where an investor can take refuge. These companies are big enough to generate stable revenues and profit thereby can create value for their investors in the long term.

Generally, large-cap companies are defined as those companies which have a market cap of Rs 10,000 crore and above. However, according to the recent categorization by SEBI, large cap companies have been defined as the top 100 companies in terms of full market capitalization.

So what is a large-cap fund? A large-cap fund has been defined as an open-ended equity scheme which is predominantly investing at least 80% of its assets in large-cap companies.

Who Should Invest In Large Cap Funds?

Individuals who want to earn higher returns than the traditional saving tools like FD, RD, etc. can invest in these funds given they can remain invested for the long term and can digest the volatility with ease in the short term.

Even a conservative investor should have at least some exposure in large cap mutual funds as these are relatively safe bets in the long term and are capable of generating superior returns.

Are Large Cap Funds Are High-Risk Funds?

Large-cap funds invest in equity and equity-related instruments which are risky in nature which cannot be ruled out. However, one must remember that over a period of long term the risk is minimized.

Which Is Better A Large Cap Fund Or Small Cap Fund?

The underlying investment of both these funds is different. The large-cap funds invest in large companies which are quite stable whereas small-cap funds invest 65% of their assets in small-cap companies which are more volatile in nature.

However, since small-cap funds are riskier they are capable of generating extra returns over large-cap funds.

Hence an investor with moderate risk appetite should go for large-cap funds while on the other hand, aggressive investors can go for small-cap funds.

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