Large-cap funds are open-ended equity scheme investing the major chunk, minimum 80% of the corpus in equity and equity-related instruments of large-cap companies.
Large–cap companies are top 100 companies in terms of full market capitalization. This list of large-cap companies is prepared half-yearly by the Association of Mutual Funds of India (AMFI).
Since this is equity-oriented, investing in the best large cap mutual funds is suitable for fulfilling long-term investment objectives like retirement planning, children’s education and marriage.
Features of Large Cap Mutual Funds
Large-cap mutual funds are majorly comprised of stocks of large companies, accordingly the features of large-cap mutual funds closely resemble the characteristics of these big companies like;
- Providing stability in revenues and earnings
- Regular dividend payout
- Transparent and clear valuations
1. Stability in Revenues and Earnings
Large-cap companies generally have a large investor base, they are well established with years of operation and proven revenue streams. They are unlikely to go out of business or face circumstances that could render them insolvent.
Therefore, the portfolio of large-cap mutual funds also exhibits stability, earning steady returns and has a lower risk as compared to a mid-cap or small-cap mutual fund.
2. Regular Dividend Payouts
Large cap companies normally have mature business models in place and hence provide very little out of box growth opportunities. This gets reflected in steady stock prices, but they compensate shareholders heavily through regular dividend payments.
Being institutional shareholders, large-cap mutual funds also show very stable price trends with little appreciation but to compensate subscribers they regularly pay dividends which they receive from investments.
3. Transparent and Clear Valuations
Large-cap companies are big and reputable corporate houses having adequate corporate governance systems in place. This mandates providing financial, operational and business information to shareholders and potential investors. All of which helps in healthy valuations exercise.
Large-cap mutual funds stand to benefit from the above aspects of large-cap companies which get reflected in better stock selection and fund allocation.
Best Large Cap Mutual Funds to Invest in 2019
1. HDFC Top 100 Fund (G)
HDFC Top 100 Fund is a large-cap fund benchmarked to the NIFTY 100 total return index. The scheme objective of HDFC Top 100 fund is to provide long-term capital appreciation/income by investing predominantly in large-cap companies.
The scheme maintains the corpus allocation of 99% in equities and the remaining 1% is allocated for debt and other instruments.
HDFC Top 100 fund is a moderately high-risk scheme. The first minimum investment amount is Rs. 5000 or a SIP of Rs. 1000.
The scheme details (as on 1st August 2019) are as under;
|Parameters||HDFC Top 100 Fund (G)|
|Asset management company||HDFC Asset Management Company Limited|
|AUM||Rs. 16,609.70 Crore|
The value of monthly SIP of Rs. 10,000 invested five years ago in HDFC Top 100 Funds (G) would have turned into an approximate corpus of Rs. 8.06 Lakh.
2. Mirae Asset Large Cap Fund (G)
Mirae Asset Large Cap Fund (G) scheme objective is to generate long-term capital appreciation by capitalizing on potential investment opportunities. The scheme predominantly invests in equities of large-cap companies.
The scheme invests 95% of the corpus in equities and the remaining 5% in other instruments.
Mirae Asset large-cap fund is a high-risk scheme. The first minimum investment amount is Rs. 5000 or a SIP of Rs. 1000.
Please note that the fund has an exit load of 1% if you redeem before one year period.
The scheme details (as on 1st August 2019) are as under;
|Parameters||Mirae Asset Large Cap Fund (G)|
|Asset management company||Mirae Asset Global Investment Management (India) Private Limited|
|AUM||Rs. 11,892.50 Crore|
The value of monthly SIP of Rs. 10,000 invested five years ago in Mirae Asset Large Cap Fund (G) would have turned into an approximate corpus of Rs. 8.46 Lakh.
Why You Should Invest in Large Cap Mutual Funds in 2019.
The following are the compelling reasons as to why large-cap mutual funds are more suitable as compared to mid-cap and small-cap mutual funds.
1. Large Cap Mutual Funds are Less Risky
Large-cap mutual funds have a comparatively lower risk than the midcap and small-cap mutual fund schemes because they invest in equities of stable large corporate houses.
In cases of high market volatility or downturn, the businesses of large-cap companies show greater resistance to fluctuations and get less impacted as compared to mid-cap and small-cap companies.
2. Large Cap Offer Consistent Returns
Even though large-cap mutual funds do not appreciate hugely when compared to mid-cap and small-cap funds but they provide you a consistent return over a period of time.
Large-cap funds receive a large sum of periodical dividends from their investment in large-cap stocks, which they pass to unit holders at regular intervals.
3. Less Aggressive
Large-cap mutual funds invest in equity and equity-related instruments of less risky companies and hence these are less aggressive and offer stable returns.
Hence, large-cap mutual funds are suited for less aggressive equity investors.
4. When you Want to Create Wealth Without High Volatility
Changing macroeconomic scenarios and geo-political conditions create fluctuations in stock prices, especially in the equity portfolios.
Large-cap companies have the ability to withstand most of the impact, hence when you invest in a large-cap mutual fund you are likely to create wealth without having a lot of volatility.
How to Invest in Best Large Cap Mutual Funds in India (Through Scripbox)
Investing in Large Cap mutual funds online through Scripbox is easy. The hassle-free paperless process involves the following steps;
Step 1: Create an Account at Scripbox
You can start by visiting the Scripbox website. Next, provide an e-mail address to open an investment account. The account can also be created by linking through Facebook or through an existing Google account.
Step 2: Create a New Plan
Once you log in, you will reach the dashboard of your Scripbox account. Here, you need to create a plan from the list of plans.
The large cap mutual fund is better suited for long-term investment goals, like retirement planning, as its helps in creating wealth through steady income.
You can choose a “Retire Confident Plan” to invest in large-cap mutual funds.
Step 3: Provide Details to Customize Plan
The details like age, current monthly expenses, retirement age and plan for age details are required to customize the plan.
Further, you need to provide details of existing savings monthly income to calculate future needs. On providing all the details you will get a plan as under.
Note: The above details are based on a hypothetical example.
Further, the Scripbox lets you save or email the plan details. You will have the plan saved on the dashboard, which you can access anytime.
Step 4: Activate and Continue to View Fund Allocation
Next, you need to activate the “long term money and view the fund allocation and several other fund related details like historical returns, fund list with the amount invested.
Here, you have the flexibility to change the allocation to suit your requirements.
Step 5: Add Bank Account to Invest
Finally, you need to add your bank account and PAN details before you remit the money and invest in large-cap funds.
You can look to invest in best large-cap mutual funds for achieving long term goals.
Large-cap mutual funds give you the opportunity to grow wealth in a more stable, and consistent manner avoiding unnecessary risk and without having to face the high volatility risks.
If you have any doubts, please feel free to ask us in the comments below.