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Equity - Large-cap

Large Cap Funds are mutual fund schemes that  invest in companies having Large market capitalization(Large Cap Companies = Market Cap >10 thousand crore)

What is Large Cap Mutual Fund?

Large cap mutual fund schemes invest in stocks of companies classified as large cap or in stocks of companies with large sized market capitalization. While ranking companies according to their market capitalization starting with the firm that has the highest market cap, as per SEBI, companies ranked from 1 to 100 are known as large-cap companies. Large cap funds invest 80% of their capital in such companies.

How to compare top performing Large Cap mutual funds?

Various factors are considered by investors to compare these funds. Some of these include:

Return offered

An investor can compare large cap funds according to the growth offered across different periods, i.e. across a year, three years and five years or more.

Expense ratio

It is the cost charged by fund to manage an investor’s portfolio. For eg, if an investor invests Rs 20,000 in a fund whose expense ratio is 2%, then the investor needs to pay the fund Rs 400. In simpler words, if the fund offers a return of 20% in a year, then the actual return for an investor is 18%. This is because the cost of 2% has to be parted with the fund.

Investment horizon

A prospective investor can pick a large cap fund according to its performance across investment horizons. So, if the investor wishes to invest only for three years, they can pick a large cap fund which has offered appropriate returns in its category for the last three years.

Benefits of Large Cap Mutual Fund Investment

  • Large cap funds offer better returns over a short term
  • They offer peace of mind to investors who cannot deal with the stress of volatility
  • Large cap funds offer steady growth
  • They are comparatively less risky

How to invest in Large Cap Mutual Funds?

One can either invest a lumpsum amount or through a SIP method. reliancesmartmoney.com offers multiple options to invest in large cap funds.