Large-cap mutual funds, under the equity funds category, focus on investing a significant portion of their assets in entities with significant market capitalisation (m-cap). These entities or companies hold a good reputation and can offer sustained profit and stability.
Considering such funds invest in top-notch companies, they have reduced risk as against mid-cap or small-cap funds, offering more stable returns. As per the Securities and Exchange Board of India (SEBI), large-cap companies are those ranking within the top 100 in terms of m-cap.
For those investors preferring long-term investments in the equity market at reduced market risk, they can go for large-cap funds.
Large-cap mutual funds tend to have a crucial role in mutual fund investments. Importantly, such funds serve as the root investment tool for balancing the delicate equation between risk and return.
Large-cap funds specialise in channelling investments into stocks of established firms with considerable m-cap, often regarded as among the top performers in the industry. Factors such as reliability and stability, which are identified with large-cap funds, make them a prudent investment option within an investor’s portfolio.
An experienced retail investor looking forward to investing in equity mutual funds can zero in on large-cap mutual funds to act as a cushion against market volatility.
For rank beginners kick-starting their mutual fund journey, large-cap funds are a sturdy instrument, inculcating resilience and confidence during phases of market ups and downs. The appeal lies in the ability of large-cap mutual funds to provide consistent performance on a long-term basis, aligning with the financial objectives and simultaneously allowing an investor to gain benefits of wealth creation and preservation.
Equity markets are known to be volatile, which is an inherent characteristic. As a result, an investor’s investment decisions and portfolio values are influenced by this. Large-cap mutual funds are designed to tide over market fluctuations. They can be a strategic choice, especially in case an investor aims to navigate market movements effectively for respectable returns.
Taking stock of the resilience of this instrument is essential in creating a strategy that can stand the test of market ups and downs.
Large-cap mutual funds have historically displayed resilience at times of market disruptions. These instruments are known to tide over market downswings comparatively better than their small-cap and mid-cap counterparts due to the stability of the companies they invest in.
The significant focus of investment on top-notch companies with strong fundamentals helps lower the impact of market movements.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.