Many people want to invest in mutual funds but avoid investing in them due to risk. Such people can start investing in mutual funds through large-cap funds. In this, the risk is less as compared to other categories of mutual funds. Large-cap funds have given returns of up to 60% in the last 1 year, which is many times higher than FDs. Here are 2 experts telling you who and how to invest in large-cap funds.
First of all understand what are large-cap funds?
Large cap mutual fund schemes require investors to invest at least 80% of the corpus in the top 100 companies. It is believed that the volatility in these stocks is low, so the possibility of loss on investing in them is less, especially in the long run.
In this, it is advisable for those investors who want to enter the stock market with less risk. Investing in large-cap equity mutual funds is considered safer.
Large cap funds provide stability
Investors should keep in mind that large cap funds provide stability and are less volatile. While the returns of these funds may be average but they continue to deliver returns. From a long-term perspective, these funds provide better returns on the basis of compounding across different market cycles.
Who should invest in this?
If you are older and want higher returns than debt funds but do not want to take much investment risk, then you can invest in large-cap funds. They can give stable returns in volatile markets. These carry low risk, thus giving them moderate returns as compared to funds with higher exposure to mid- and small-cap equities. If you are nearing retirement or can’t take much risk, you can invest in top-rated large-cap funds.
It is right to invest in them for long term
Pankaj Mathpal, a personal finance expert and founder and CEO of Optima Money Managers, says that one should invest in these schemes keeping in mind the time period of at least 5 years. Keep in mind that in the short run, the impact of stock market volatility can be more on your investment, while in the long run this risk is reduced.
It will be right to invest through SIP
Harshvardhan Rungta, CFP and Personal Finance Expert, Rungta Securities, says that instead of investing all money in mutual funds, one should invest through Systematic Investment Plan (SIP). Through SIP, you invest a fixed amount every month in it. This further reduces the risk as it is not affected much by market volatility.
Special things related to
- Large cap funds are more stable than mid cap and small cap funds.
- In this, investments are made in large companies, these funds have less risk.
- During a downturn in the market or business, investors invest in large cap firms as it is considered a safe investment.
These bluechip funds have given great returns in the past years
| Fund Name | Return of last 1 year (%) | Annual Average Return (%) for the last 3 years | Annual Average Return (%) in the last 5 years |
| Franklin India Bluechip Fund | 59.6 | 13.0 | 11.4 |
| SBI Bluechip Fund | 48.0 | 12.7 | 12.1 |
| Tata Large Cap Fund | 47.3 | 12.2 | 11.7 |
| Kotak Bluechip Fund | 46.6 | 14.1 | 13.3 |
| ICICI Prudential Bluechip Fund | 44.7 | 12.4 | 13.1 |
| Canara Robeco Bluechip Equity Fund | 44.2 | 16.1 | 15.9 |
| Axis Bluechip Fund | 40.7 | 14.1 | 16.0 |
