What are large cap mutual funds?

When you are planning to invest in equity, one thing an investor should learn is to spread its investment. Return expectation, return appetite and future goals are some of the investment decisions one has to take before investing in equity. An investor can choose from a wide variety of investment options and each of them has their own characteristics, advantages and disadvantages. It can be mid cap, large cap, small cap, multi-cap mutual funds with both growth and dividend options. Here we understand the meaning of the best large cap mutual funds and why you should invest in it.

Meaning of Large cap mutual funds

These are the funds that invest a major corpus in companies that have large market capitalization. There is no specific theory to decide as each fund house applies its own analysis and research and categorizes stock under various categories. Typically, companies with market capitalization of Rs. 1000 to 1500 crores or more are contemplated as large cap companies. The instability of large cap funds is less in comparison to mid and small cap funds. Large cap funds also reveal the state of the economy. Due to stagnant nature of funds, the returns offered from large cap funds are reasonable low than mid and small cap funds.

Why should you invest in large cap mutual funds?

When you invest in large cap mutual funds, it implies that investment is made in top blue flake companies. As mentioned above it is considered as a stable investment. The stock of such blue flake companies is regularly tracked on different market catalogues. Mutual funds are meant for long term horizon and specifically when you are looking for returns offered from large cap funds with an investment period of 10 to 15 years. It is more than 12% of cumulative returns.

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