Mutual Funds offer various investment options in companies of varying market capitalization. A Fund needs to be chosen according to the investor’s risk appetite and financial goal. Investment into large cap mutual funds is one of the most recommended investment options today due to its large variety, less volatility, stable returns, etc.
Investors who wish to create wealth without taking much risk can consider investing in large cap mutual funds. Financial planners/advisors also suggest and encourage their clients to invest in the large cap mutual funds as large cap mutual funds are placed better and tend to give better returns even during market fluctuations.
Now, let us understand what are the best large cap mutual funds?
Best large cap mutual funds are those mutual funds that invest in companies that have large market capitalization and have an outstanding track record. The market capitalization of large cap companies is around Rs. 20,000 crores or more currently. When it comes to business, these companies are well experienced and are great players. The most important characteristic of the large cap companies is their good performance and stability during volatility in the market. If you are interested in investing for a long horizon and make a steady profit without much risk, large cap mutual funds are the best option for you.
Advantages and Disadvantages of Best Large Cap Mutual Funds
One of the major advantages of a large cap mutual fund is the stability that these funds bring to your portfolio. The large cap companies pay their dividends consistently and they have good records as well. Moreover, these large cap companies are present in the market for a long period, so you can obtain all the necessary details about them such as their management, performance, etc.
However, over the long term, the scope and potential for growth is quite less in case of the large cap companies hence large cap mutual funds tend to provide lesser returns as compared to the small and mid-cap mutual funds over the longer tenures.
Who should invest in Best Large Cap Mutual funds?
Best Large Cap Mutual funds are a very good investment option for beginners or first-time investors. Ideally, the investment option of an investor should depend on the goal of his investments, the tenure for which he is interested in investing and the level of risk he is willing to face in the investment.
Those investors who wish to earn their returns without being much exposed to the risk arising due to the uncertainties or fluctuations in the market should invest in the Best Large Cap Mutual funds. Since the large cap companies have good performance records and are financially strong, they tend to maintain stability during the market fluctuations. Even though there can be scenarios in which the returns from large cap funds might be lower than small and mid-cap funds, but they are relatively better protected from market falls which cancel out the effects of loss over the long term. Simply put, the returns obtained from the best large cap mutual funds tend to be less volatile.
Top large cap mutual funds
Let us have a look at the top 4 large cap mutual funds in which a risk-averse investor should think about investing.
||Aditya Birla SL Frontline Equity Fund
||Axis Bluechip Fund
||HDFC Top 100 Fund
||ICICI Pru Bluechip Fund
(As of 13th August, 2019)
The list mentioned above shows a detailed view of the top large cap mutual funds in India. You can use this data for reference while deciding about investing in large cap mutual funds.
Things an investor should consider when investing in Best Large Cap Mutual Funds
There are certain factors that an investor should keep in mind while investing in large cap mutual funds.
o Understand the objective of your investment
It is highly important that you understand and analyze the major goal or objective of your investment before making any investment. If you have clarity on your aim of investment, then you will be able to find out whether the objectives of the fund in which you are investing matches up with your goals or not.
If the objectives of the fund and your investment objectives do not align with each other, then the investment would not be of much use in the long run. Moreover, you should understand the methods by which the funds are being managed so that you can have the necessary knowledge of the performance of the fund in which you have invested.
o Past performance of the large cap mutual fund
It is quite crucial to know about the past performance of the large cap mutual fund in which you are planning to invest. You should look for the overall performance of the fund across all the conditions of the market. Most of the Best performing large cap mutual funds will perform consistently in all market conditions and you should choose such funds for investment.
o Fund Management
Fund manager and his level of experience play an important role in your selection of the best large cap mutual funds. A fund manager’s consistent handling of different market scenarios is very important for generating consistent returns. So, it is necessary to select the Fund Manager wisely.
o Expense Ratio
Expense Ratio, also known as the Management expense ratio, is a tool to measure how much assets of a fund are used in the administrative and other expenditure related to operations. It might also include charges like the brokerage fees, certain costs charged by Mutual fund houses, etc.
These Operating expenses tend to lower the assets of a fund and in turn reduce the returns to the investor as well. Before, investing in any Large Cap mutual fund you should understand and compare these charges and the returns with its peers to choose the best large cap fund. Best performing large cap mutual funds will have lower expense ratio and higher returns.
o Exit Load
Exit load is charged to the investor directly when he/she redeems his/her investment before the stipulated period. This exit load is a fraction of the return an investor receives. So, you should always check the applicable exit load of the large cap mutual fund in which you are planning. Choose a large cap fund that does not have any/low exit load or remain invested for the specified period to avoid incurring an exit load.
To summarize, best large cap mutual funds are an excellent investment option for those investors who want consistent returns from the funds. However, there are certain market risks involved in almost all investment options. So, it is always advisable to take help and guidance from Mutual fund advisors like IndiaNivesh before investment. You can always take control of your funds, but it should be done after gaining some experience about mutual funds.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.