Best Large Cap Mutual Funds

Features of Large-Cap Funds

Before you start investing in large cap mutual funds, you must know how to distinguish large cap funds from others and what their characteristics are. Below are some prominent features of large cap mutual funds that you should consider while investing in them:

•  Large cap mutual funds are those mutual funds that invest majorly in the stocks of large-cap companies. As per the Securities and Exchange Board of India (SEBI), top 100 companies listed in the stock exchanges by market capitalization are considered to be large cap companies and large cap mutual funds invest 80% of their AUM in the large cap companies. Large-cap companies have market caps of Rs 20,000 crore or more.

   

•  Large cap mutual funds are usually the safer option to invest in. Unlike small-cap or mid-cap mutual funds, the NAVs of large cap funds do not fluctuate too much.

   

•  The returns on large cap funds are usually very stable. You should invest in large cap mutual funds only if you wish to get stable returns in the long term with lower risk exposure. 

   

•  Since all large cap mutual funds are equity funds, they attract capital gains tax and dividend distribution tax. If the investments are held for one year or lesser, Short-Term Capital Gains (STCG) tax of 15% is applicable on returns. If the investments are held for more than a year, Long-Term Capital Gains (LTCG) tax of 10% (without indexation) is applicable. 

Benefits of Investing in Large Cap Equity Funds

The benefits of investing in large cap mutual funds are plenty. Let’s look at some crucial ones:

• Investment Stability
  The most noteworthy advantage of investing in large cap funds is that they provide stability to your investments. Since these funds invest in companies that have a proficient business plan, steady growth history, and consistent revenue generation, there are very less chances of capital depreciation in the long term. 

• High Returns
  Another advantage of investing in large cap mutual funds is that they have the potential to provide decently high returns in the long term. If you can stay invested in a large cap fund for, say, five to ten years, you can gain good returns on your investments. However, it’s prudent to select the best large cap mutual funds for your investment as per its CRISIL rating and other factors.

• High Liquidity
  Another factor that makes large cap mutual funds good for investors is that they offer a high amount of liquidity. Since large cap funds do not experience too many fluctuations in their prices, you can invest and redeem your investments as per your liquidity requirements. You won’t incur too many losses even if you redeem your funds during a down market.

• Diversification of Portfolio
  Large cap mutual funds invest in companies with large market capitalizations across various sectors. That is why these funds allow you to create a well-diversified investment portfolio. Your money gets invested in niche companies from multiple sectors, including banking, automobile, power, energy, telecom, etc. You don’t have to invest in each sector individually.

How to Invest in a Large-Cap Fund?

Those who want stable returns without too much risk exposure should invest in large cap funds. You can look at the list of large cap mutual funds on this page and select the best funds for your investment. Here’s how you can invest in large-cap funds:

Step 1 - Register online on the Moneyfy platform using your KYC details.

Step 2 - Submit the required documents, such as your PAN card, Aadhaar card, bank statements, etc.

Step 3 - Select the best large cap mutual fund in which you want to invest your money.

Step 4 - Choose whether you want to invest through a Systematic Investment Plan (SIP) or lump sum.

Step 5 - Complete the investment through an appropriate mode of payment. You can make the payment through NetBanking, UPI, or sign-up for a direct bank mandate.

Who Should Invest in Large Cap Funds?

Here are individuals who will find investing in large-cap funds ideal:
 

1. Investors who have a low-risk appetite
 

Large Cap Funds invest in well-established companies with strong business models and market share. These firms withstand market volatility better than mid or small-caps. Therefore, Large Cap Funds are ideal if you seek equity growth with lesser risk.
 

2. Investors who want to invest in the country’s top companies
 

Large-cap companies are those that have survived dynamic market conditions over the years, owning to their successful business models. And so, when you invest in these companies, you effectively become a part-owner of India’s top, reputable companies.
 

3. Investors who want a stable core portfolio
 

While large-cap funds might yield slightly lower returns than smaller companies, they still offer double-digit returns with less volatility in the long run, allowing you to grow a robust investment portfolio over time.