According to regulatory guidelines, a large-cap company is a listed company ranked from 1st to 100th on the Indian stock exchanges 1 terms of market capitalisation. Hence, for a fund house, a large- cap scheme needs to invest at least 80% of its corpus in large-cap companies, with the flexibility to invest the remaining 20% in other companies as per the discretion of the fund manager.
What Do These Funds Score?
Large companies score due to their promoter strength, large pool of talent with experience, and presence in the business for a longer time. Many companies are tracked by both Indian institutional as well as foreign of reports investors. Hence, there is higher transparency and availability on the performance and outlook of these companies in the public domain. Since these companies are large, they can attract strong financial institutions and have the relevant skills and bandwidth to deal with tough economic environments and scenarios in a far better way than smaller companies. From a stock market perspective, such companies are more stable and have visibility of earnings with longevity.
No. Of Large- Cap Funds?
As of Oct 2024, there are 32 large-cap schemes with 15.2 million folios managing assets worth 3.7 lakh crore. This is the fourth-largest category among equity mutual funds.
Who Should Opt For One?
Large-cap funds are ideal for investors who seek steady returns with relatively lower risk and have a time horizon of five years and above. Typically, a large-cap fund or an index fund that is large-cap oriented should be part of the core portfolio holding of every investor, with the satellite portion going to thematic or mid/small- cap funds. Financial planners believe investors moving from fixed deposits or new to equity mutual funds and are uncomfortable with volatility should only start with large-cap funds. Conservative Investors could own large-cap funds and avoid mid and small cap funds.
Disclaimer: – Mutual funds investments are subject to market risk. Please read the offer documents carefully before investing
