Large Cap organizations are established players and come with a fair reputation and vintage. They have a stable corporate administration that makes them trustworthy.
As of late, SEBI’s recategorization has modified the foundation to determine whether an organization is a large-cap, small-cap, or mid-cap. Large-cap organizations are those that constitute the top 100 companies in terms of market capitalization.
1. What are Large Cap Funds?
Large Cap funds are a kind of equity funds that invest a major proportion of their assets under management (AUM) in equity shares of companies with a large market capitalization, such as Reliance, HUL, TCS, and more. These companies that fall under this bracket are known to have a high reputation in the market. With the best large-cap funds, you can be assured that you are investing in companies that have an excellent track record of performing well in the medium to long-term horizons.
When contrasted with small-cap and mid-cap funds, these funds tend to pose a lesser risk and might be perfect for risk-averse investors.
2. Who Should Invest in Large Cap Funds?
Large Cap should be a choice for those individuals who need to make good use of equity investments but don’t need their returns to keep on fluctuating with time. Since large-cap funds are known to be financially stable, they are capable of withstanding bear markets.
Large Cap funds give a sort of much-needed steadiness (from an investor’s point of view) to your investment profile, so much so that you might even think of adjusting the focus of your investment around them so that they form a major chunk of your investment portfolio.
However, one of the problems that might arise even with the best large-cap funds is that they might fail to meet expectations of return in the market when contrasted with mid-cap or small-cap equity.
3. Is it Good to Invest in Large Cap Funds?
Large Cap Funds are ideal for investors who are looking for steady returns with relatively lower risk. These funds rely upon the horizon of your investment. To make the best out of these funds, it is recommended that you should invest in them for at least five to seven years. Investors with a higher risk appetite, are better off by investing in Mid-cap or Small-cap funds.
4. Things to Consider Before Investing in Large Cap Funds
- Investment risks:Large-cap equity funds are also liable to the several risks that come with the market. However, these risks tend to be quite moderate. When you compare them to small-cap or mid-cap funds, the Net Asset Value (NAV) fluctuations are relatively small.
- Expense Ratio:Like all mutual funds, large-cap mutual funds come with an expense so that your investment is well-managed. This is called the expense ratio of a fund, a lower expense ratio can help to balance means higher take-home profits.
- Investment Horizon:Large Cap equity funds work best for those who want to invest for the medium to long run – people who invest in these funds should be invested in them for at least three to five years to witness the potential of returns on offer.
- Tax on Capital Gains:Large-cap funds receive the same tax treatment as other equity assets. Capital gains earned on a holding period of as long as one year are called short-term capital gains (STCG). These attract a 15% tax. On the other hand, long-term capital gains (LTCG) have an investment period of over one year. According to the prevailing tax rate, the LTCG that falls over ₹ 1 lakh is taxed at 10% without indexation advantage.
5. Top 5 Large Cap Funds With Highest Returns
To make things simpler, we have compiled a list of large-cap mutual funds with the highest returns in the last three years. Investors looking to invest in Large Cap Funds should pick the one that meets their investment objectives.
| Fund Name | 3-Year Return (%) | 5-Year Return (%) | |
| ICICI Prudential Bluechip Fund Direct-Growth | 20.99% | 18.91% | Invest Invest on App |
| Canara Robeco Bluechip Equity Fund Direct-Growth | 16.43% | 18.89% | Invest Invest on App |
| Kotak Bluechip Fund Direct-Growth | 17.43% | 18.19% | Invest Invest on App |
| Edelweiss Large Cap Fund Direct -Growth | 18.78% | 18.20% | Invest Invest on App |
| Baroda BNP Paribas Large Cap Fund Direct-Growth | 19.77% | 19.27% | Invest Invest on App |
*Last updated as on 28th May 2024
View All Large Cap Mutual Funds
6. Frequently Asked Questions
What are the advantages of large-cap mutual funds?
Large-cap funds have several advantages. Here, let’s look at how you can benefit from them.
1. They are invested in companies that have a history of performing well
2. They are known as a steady investment option
3. Best for investors who want to balance out risk & return
How to Invest in Large Cap Funds?
It is quite easy to invest in large-cap mutual funds on ET Money. Here are the steps that you have to follow.
1. Register online on the ET Money app or website
2. Head to the mutual funds section and choose the Large Cap fund you want to invest in.
3. Click on invest and choose the amount and mode of investment (SIP or Lumpsum)
4. Provide your KYC details (PAN number, Bank details) and complete your investment.
Are Large Cap funds safe?
Large Cap funds are relatively safer form of equity investments as they are known to withstand bear markets. With a good investment horizon, Large Cap funds can deliver sound and stable returns.
Who manages Large Cap equity funds?
Like all mutual fund schemes, Large Cap funds are also managed by professional fund managers.
How much do you need to start investing in Large Cap funds?
The best thing about any mutual funds is that you do not need a lot of money to start investing. You can start with Systematic Investment Plans (SIPs) that are as low as ₹500 per month. These SIPs, once started, are automatically deducted from your bank account.
Are Large Cap funds risky?
No, When compared with other equity instruments, large large mutual funds are relatively less risky in short to medium term.
Are Large Cap equity funds tax-free?
No, gains from Large-cap equity mutual funds that are held for more than 12 months, fall under a tax bracket of 10%. However, the gains up to ₹1 lakh are completely tax exempted. When they are invested for less than 1 year, the tax stands at 15%.
