Large-Cap, Small-Cap, Mid-Cap, Multi-Cap… Is all the financial jargon around mutual funds confusing you? I’ve put on my thinking cap to help you understand all the fuss around these caps.
You may have gotten suggestions from friends and family to invest in “big companies” or “large-cap funds” because they are “reliable” and “consistent”.
But what makes them reliable and consistent? And why should you even be investing in these funds? Let’s break it down & understand large-cap funds.
What Are Large-Cap Mutual Funds?
Equity mutual funds which invest a large chunk of their money in companies that have a huge market capitalization are known as large-Cap Funds. According to SEBI guidelines, any company with a market cap of above ₹ 26,677.06 Cr is a large-cap company.
Basically, these companies have a huge market capitalization because they are iconic industry leaders. This is why large-cap companies have a proven historical track record of creating steady wealth and consistent dividends over the long term for their investors.
We suggest you read the following blogs as well to develop a thorough understanding of what these different caps mean:
Large-cap funds are ideal for investors looking to grow wealth over 5+ years. So generally, these funds can find their way into retirement plans, your child’s university/college fees, or to simply pay your future self.
Thus, to get the most out of these funds, you must be prepared to stick to the fund for the long run.
People invest in large-cap funds to:
Diversify your portfolio: Since this is a low-risk, low-reward investment, it can be a good addition towards building a balanced portfolio
Add stability: The stable returns and consistent dividends that these funds offer can be a reassuring prospect for investors
Risk-averse: This can be suitable for investors who want to minimize risk
Long term benefits: Historically, these funds have been known to generate returns of around 10-12% over the long term
The Advantages Of Investing In Large-Cap Mutual Funds
Generally, a company’s market cap determines the benefits and associated risks of investing in it. So larger the market cap, lesser the risk and better returns. This is one of the biggest reasons why large-cap funds are considered to be less risky as compared to small-cap or mid-cap funds.
Here are some of the other advantages of investing in large-cap funds:
Less volatile compared to small-cap funds
Usually give consistent returns over the long term
Are backed by a proven track record
Are highly liquid & easy to sell compared to other funds
Usually average out the loss incurred during rough periods over the long term
Large-Cap Funds Currently Recommended By Cube’s Wealth Advisor
All mutual funds on the Cube Wealth app are picked by our amazing wealth advisor, Wealth First. They have made it easy for Cube Wealth users to invest in suitable schemes by curating a list of the top funds for every month.
Large-Cap Mutual Funds
Motilal Oswal Focused 25 Fund
Mirae Asset Large Cap Fund
DSP Nifty Next 50 Index Fund
Wealth First has a track record of beating the benchmark by ~ 50%. They have over 3,000 clients and an AUM of ₹7,000+ Crores. You can speak to our Wealth Coaches today to learn more.
Note: All facts and figures are updated as of 23/09/2020.
While we update our pages regularly, we advise you to check the Cube Wealth App for the latest data.
Before investing in any scheme, it is important to understand what your goals are and the risk profile. Talk to our wealth coaches to understand if this is the right investment for you.
That said, large-cap funds can be a stable addition to an investor’s portfolio regardless of age because they offer steady returns with reasonably lower risk.
You can download the Cube Wealth app today to check out the QuickSIP feature. It allows you to invest based on your risk appetite and investment goals.
Check out this video on how to start investing in Mutual Funds
Shriram is a Consultant at CubeWealth. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. His love for philosophy, developing products, and empowering people through quality content is what got him to CubeWealth.
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