Top 5 Large Cap Funds

Below is the list of best five large cap funds

Name of Fund 5 Year Returns (p.a.) Scheme Category
Kotak Bluechip Fund 14.24% Large Cap
Axis Bluechip Fund 13.50% Large Cap
ICICI Prudential Bluechip Fund12.90% Large Cap
Mirae Asset Large Cap Fund13.76% Large Cap
SBI Bluechip Fund14.01% Large Cap
These funds invest minimum 80% of its assets in large/bluechip companies. These funds are less volatile as they invest in index heavy weights.

What are large cap funds?

The fund that invests its larger portion of corpus in large-cap companies come under large-cap funds. These companies are highly reputed, trustworthy, and strong in every aspect of the business. The stability of such companies allows its investors to generate regular income along with compounding wealth.

Are large cap funds risky?

Equity funds are known for its risk with return benefits in the market. All equity related instruments hold risk depending on the nature, size, and working of the company. With fluctuating benchmark of the market, Net Asset Value (NAV) of these funds either increases or decreases.

However, large cap funds have lower risk as they invest in large-cap companies as compared to small-cap or mid-cap funds. These funds give stability to the investors’ portfolio. But, with low risk comes low returns. Large cap funds offer lower returns than mid-cap or small-cap funds.

What are the benefits of investing in large cap funds?

  • Safer option: Large-cap companies have a low probability of the business shutting down. Hence, it is a safer option for investors.
  • Downfall of the company: The slowdown in large-cap companies doesn’t happen as quickly as in mid-cap or small-cap companies. They can survive bear market without going out of business.
  • Dividends: Most of the large-cap companies pays dividend to its investors, unlike small or medium scale companies that hardly pays any dividend.
  • Mean for steady wealth creation: Large-cap funds allow investors to earn a steady and compounding wealth with its regular dividend payments.

Who should invest in large cap funds?

Large-cap funds are recommended for conservative investors who are seeking to earn some passive income. Investors looking for long-term financial goals, low risk, and steady income, can consider large-cap funds over other types. These companies are comparatively stable with high-profit margins. They can efficiently survive the volatile market by offering more benefits than the risk factor.

What are the key points to be kept in mind before investing in these funds?

  • Risk and returns: The fluctuations in large-cap funds are less compared to mid or small cap funds. Hence, the risk and returns pertaining in these funds are low.
  • Management cost: SEBI has set the management cost of large-cap funds to be 2.50%. While investing, the investor should always consider the expense ratio.
  • Investment span: Large-cap funds are ideal for wealth generation as they yield higher returns in the long-term. The investor should be ready to stick with these funds for about five-seven years to churn good returns.
  • Financial goals: Each financial instrument is associated with a unique financial goal of an investor. Investors with long-term financial goals can consider this option of investment.

Are large cap funds better than investing in FD for a horizon of say 5 years?

FD is a no-risk instrument and is ideal for long -term as well as for short-term periods. Whereas, all equity instruments are market-based with no-fixed rate of returns. The decision of investing in FD or long-term mutual funds depends upon the investor’s risk capacity and the amount that he is willing to invest. FD requires a lump-sum amount; whereas, long-term funds can be initiated with a lump sum or an amount as low as ₹500. It is always beneficial to invest in long-term funds as compared to FD as the prior offers low-risk with convincing returns.

How much money do we require to invest in large cap funds?

There are two options to invest in long-term funds, namely, lump-sum and SIP. There is no limit for the investor if he wants to invest a lump-sum amount. However, SIP is a monthly/quarterly/half yearly investment plan. In SIP, the investment amount can be as less as ₹500 per month.

Where these funds invest their money?

Large-cap funds invest its money in large-cap companies. Under SEBI’s guidelines, its mandatory for large-cap funds to invest 80% of its corpus in large-cap companies consisting of first 100 companies of BSE/NSE as per the market capitalization.

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