Mutual funds that invest in equities and equity-related securities of companies listed on the exchange are known as equity funds.
One of the most popular types of equity funds is large-cap.
Below, we'll go through the aspects of best large cap mutual funds how they function, and which large-cap funds are the best.
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What are Large-cap Mutual Funds?
Large-cap mutual funds are ones that invest the majority of their assets in markets with high capitalisation. Because these equities have minimal risk, there is great growth potential.
These funds invest a larger part of their assets under management (AUM) in the market's top achievers.
A large-cap mutual fund invests in those companies that have an excellent market reputation for consistent wealth development, strong financials and organised management.
Large-cap stocks are ideal for risk-averse long-term investors because the risk of their capital being degraded is low.
These are appropriate for low-risk investors who want to be sure they're investing in a company with a proven track record.
Features of large-cap funds
Features of best large cap mutual funds are as follow:
- These funds are best suited for investors with low-risk tolerance.
- Large-cap funds invest in companies with large market capitalizations that are frequently dominating leaders in their respective industries.
- Because of its liquidity, a large-cap fund supports easy purchasing and selling. It can be traded even when the market is down due to its reputation and quality in the market.
- Because best large cap mutual funds in equities of well-established firms, the risk associated with them is smaller than that of other equity mutual fund schemes.
- Large-cap funds are very stable, and changes in the stock value of large firms are uncommon.
As a result, fund returns do not rise immediately, but they also do not fall rapidly. Blue-chip funds, as a result, provide consistent returns. - Because information about these organizations is publicly accessible, large-cap funds are great for the investors who are investing for the first time.
List of Best large-cap funds
1. Axis blue-chip fund
A blue-chip fund is an open-ended equity scheme that primarily invests in large-cap company shares and equity-related assets.
Blue-chip funds, also known as large-cap funds, invest at least 65% of their entire investible capital in equities and equity-related securities of financially well-established corporations.
The Axis Blue-chip Fund seeks to outperform the benchmark while carrying a lower risk.
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2. Kotak blue-chip fund
An open-ended equity fund that invests in prominent companies with large market capitalizations in a variety of industries.
The schemes seek to find companies that are reasonably stable in relation to the broader market and choose equities based on financial strength, and prior performance of the company.
This open-ended fund Scheme is appropriate for investors looking for Investment in a portfolio of large-cap businesses' shares and equity-related instruments.
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3. ICICI Prudential Blue-chip Fund Direct Plan-Growth
ICICI Prudential Blue-chip Fund Direct Plan-Growth is a mutual fund that invests in stocks. As of 31-03-2022, ICICI Prudential Blue-chip Fund Direct Plan-Growth has 31235 Cr in assets under management (AUM), which is higher than the category average.
ICICI Prudential Blue-chip Fund Direct Plan-Growth had a 14.6% annualised return since its beginning. The expense ratio of the fund is 1.06 percent.
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4. Canara Robeco Blue-chip Equity Fund (Growth)
Canara Rob Blue-chip Equity Fund is a large-cap fund that invests 96 percent of its assets in Indian equity, with 88 percent invested in large-cap stocks.
This fund seeks long-term growth and capital appreciation. It invests primarily in companies with a significant market capitalization. Canara Robeco Blue-chip Equity Fund has returned 12.90 percent since its inception.
The fund's expense ratio is 0.35 percent.
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5. Baroda BNP Paribas Large-cap Fund
Baroda BNP Paribas Large-cap Fund (G) is a Large-cap Equity fund that has delivered an annualised return of 15.6% over the last 17 years. This fund's cost ratio is 1.02 percent.
The fund's investment aim is to achieve long-term capital growth by investing primarily in high market capitalization companies.
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6. The Mahindra Manulife Large-cap Pragati Yojana - Direct Plan
An open-ended equity plan that mostly invests in large-cap stocks. The fund primarily invests 95.76% in large-cap firms, 4.24 percent in mid-cap companies, and 0.0 percent in small-cap organisations.
Over the last three years, the fund has provided an annualised return of 12.6% The expense ratio of the fund is 0.79 percent.
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7. Mirae Asset Large-cap Fund Direct Plan-Growth
Mirae Asset Large-cap Fund Direct Plan-Growth is a mutual fund that invests in stocks. This fund was established on January 1, 2013.
The scheme seeks out companies that have a long-term competitive advantage, such as equities with considerable pricing power and industry leadership.
Mirae Asset Large-cap Fund Direct Plan-Growth has returned 16.62 percent since its establishment. The expense ratio is 0.62 percent.
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8. Invesco India Large-cap Fund (G)
Invesco India Large-cap Fund (G) is a Large-cap Equity fund that has achieved an annualised return of 11.6 percent over a 12-year period. For the direct plan, the expense ratio is 0.9 percent.
The fund's asset allocation is roughly 98.17 percent equities, 0.0 percent debt, and 1.83 percent cash and cash equivalents.
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9. The IDBI India Top 100 Equity Fund
An open-ended equity plan that mostly invests in large-cap stocks. This fund is appropriate for investors seeking long-term capital appreciation.
The IDBI India Top 100 Equity Fund will have an Exit Load of 1% if redeemed within one year. For the direct plan, the expense ratio is 1.31 percent.
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10. UTI Mastershare Unit (Growth)
Within large-cap mutual funds, UTI Mastershare Unit (Growth) is a good option. The Fund keeps its portfolio well-diversified and minimises sector and stock concentration. Suitable for long-term investments of at least 5 years.
UTI Master Share-Growth Option - Direct has returned 13.49 percent since its start. The expense ratio of the fund is 0.91 percent.
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Who Should Invest in Large-cap Funds?
Large-cap funds provide steady returns and are less volatile than small and mid-cap funds because they invest in companies that have a big market capitalisation and are financially strong.
As a result, this is advantageous for individuals wanting higher returns with less risk.Large-cap funds are good for constructing a retirement plan since they offer modest growth, assisting you in creating a corpus to meet your eventual retirement goals.
Large-size funds are relatively stable and have steady market growth and provide good returns within 5-7 years, so if you are an investor with a long-term investment perspective, you can invest in large-cap funds.
In comparison to other equities mutual funds, the likelihood of their portfolio being degraded is relatively low.
If you're looking to diversify your equity portfolio, a large-cap fund can be a good place to start. Large-cap corporations are well-established and have a long track record.
Furthermore, the company's information is easily accessible to investors at all times. As a result, investors who want a safe environment to invest in and want to ensure that they are investing in the proper fund can gain access to the company's prior performance in order to reduce risk.
How to invest in Best Large-cap fund?
- All you need to do is to choose the suitable platform as per your need and then complete your profile by signing up.
- Fill in all of the details as directed.
- Complete your KYC by providing important details such as identity proof (Adhaar card, voter id card, pan card) and bank account information.
- After completing the KYC, log in to your account and search for the large-cap mutual fund in which you wish to invest, then make the payment by UPI, net banking, or any other available option.
How to Choose the Best Large-cap Mutual Funds?
- Assets under management
It is vital to investigate assets under management to assess the portfolio quality in which you intend to invest. Always choose funds with a high AUM to get stable returns. - Long term period
large-cap funds have the potential to provide good and reasonably predictable returns because they invest in top companies.
Long-term investments in large-cap funds can provide investors with high returns. Always opt for long-term investments to reduce risk. - Exit load
Exit load charges are applied to large-cap funds at the time of redemption. The exit load is only valid if redemptions are made within a specific time frame.
It varies depending on the fund. However, it is usually 1 percent of the redeemed amount only if the redemption is done within 12 months of the investment date. Before investing, double-check the exit load charge. - Investment objective
Investors must determine their investing aim, risk tolerance and time period for how long they want to invest before determining whether a large-cap fund is a good fit for them.
Large-cap funds are often intended for individuals with low-risk tolerance and the ability to invest over a period of more than five years. - Company history
Before making any investment, carefully consider the company's prior record and rate of return. - Expense ratio
Always choose the one with the lowest expense ratio. The cost ratio is a charge that is paid to manage the investment.
The new SEBI requirement states that funds cannot charge an expense ratio greater than 2.5 percent.
How do Large-cap Mutual Funds Work?
Things an Investor Should Consider While Investing in Large-cap Funds
- Risk and returns
When the scheme's benchmark fluctuates, the net asset value varies. This change is lower in large-size mutual funds than in small-mid cap mutual funds.
When compared to mid-cap mutual funds, the returns from large-cap mutual funds will not be much higher, but the risk will be lower. - Expense ratio
Before investing, it is best to evaluate the expense ratio of the mutual fund. The cost ratio is essentially a price imposed to manage your investment.
The maximum expense ratio allowed by SEBI is 2.50 percent. To maximise your returns, always choose funds with a low expense ratio. - Investment purpose
It is essential to understand the aim of your investment since it allows you to select the appropriate fund based on your goals.
This fund is suitable for those who wish to invest for a term of at least three years. Before investing, it is necessary to make sure that this investment meets your objectives. - Conduct research
Before investing, always conduct a mutual fund study. You should be aware of their previous performance and consistency. It is preferable to investigate their background to avoid any risk engagement. - Taxation
The tax rate is determined by whether your investment is short or long-term. However, taxation on short-term gains is 15%, whereas taxation on long-term gains is 10% if the gain exceeds Rs.100,000. If the gain in a large-cap fund is less than Rs.100,000, it is tax-free. - Investment horizon
There's always the risk of a market downturn. During a market downturn, funds may underperform, although this performance can be improved over time if invested for more than three years.
Large-cap funds are advantageous for long-term investments because the longer you hold them, the greater your possibilities of profit.
Advantages and Disadvantages of Best Large-cap Mutual Funds
Investing in large-size funds can be beneficial as well as unfavourable to some investors. Let us look at the benefits and drawbacks of large-cap funds.
Advantages-
- Companies having a large market capitalization are more stable than those with a smaller market capitalization. Even if its performance drops during a market downturn, it can still recover owing to long-term investment.
- Large-cap funds have high liquidity, allowing fund managers to sell or acquire at any time to maximise profits.
- since large fund companies have been present in the industry for a long time It is simpler for investors to examine their prior performance and profitability to determine whether or not to invest.
- Large-cap funds are advantageous for investors seeking a high return while minimising risk.
- If invested for a longer period, The likelihood of higher returns rises.
- Many large corporations give dividends to their shareholders. Dividends are generally payments made to investors from a company's profits. Aside from that, dividends are tax-free.
- Large-cap funds are especially advantageous for those seeking to invest a lump sum due to their consistent performance and low risk.
Disadvantages-
- Large size funds often yield lower returns than small-mid cap funds.
- Large-cap funds are only for individuals who want long-term capital returns and not for individuals seeking high profits in a short period.
- You have no control over the fund portfolio because it is managed by the fund managers.
- Slow growth when compared to mid-cap funds.
Risk Involved with Large-cap Funds
- Even though large-size funds invest in stable, and reputable companies, they are not risk-free, although they are less dangerous than mid and small-cap funds.
Poor market performance is always a possibility, and it can be caused by both external and internal forces such as geopolitical and economic reasons. - Market risk, as well as company-specific risk, affect these blue-chip companies.
Diversification benefits provided by mutual funds minimize company-specific risk, but the market risk is unavoidable. - Rising interest rates can cause securities prices to fall in the other way. These interest rates are determined by the issuer's credit availability and market demand.
- There is a risk of losing money when investing primarily in the stocks of a single-sector firm. However, this risk is low in Large-cap funds because invest in stocks from many industries, which reduces portfolio risk.
- If the fund manager is unable to sell securities at a profit due to a shortage of buyers, liquidity risk may arise.
Taxation on Large-cap Funds
The capital gain generated by an asset held for a long time (i.e., a long holding period) is referred to as LTCG, whereas the capital gain generated by assets held for a shorter time is referred to as STCG.
According to Section 112A of the Income Tax Act of 1961, LTCG income tax on mutual funds is taxed at a rate of 10% on capital gains over one lakh. If the units are sold before the 12-month term, the profits are taxed at 15%.
Long-term profits in debt funds are taxed at a fixed 20% rate with indexation benefits. Indexation is the process of adjusting an investment's purchase price to reflect the impact of inflation.
Investors can reduce their long-term capital gains with indexation benefits, resulting in fewer tax payments.
Conclusion
To summarise, large-cap funds invest in the firms having large-capitalization over the market and provide consistent returns when held for a long time. It is suitable for long-term investors seeking low-risk investments.
Long-term investing can be more tax-efficient than holding units for a short period. Large size funds, as opposed to small-mid cap funds, perform well even when the market is declining and can survive the bear market.
You can also examine their prior performance before making any investments. Before investing, it's a good idea to look into things like the fee ratio and the fund's prior performance.
Frequently Asked Questions
Q1. Which large-cap fund is best?
One of the greatest Large-cap mutual funds to invest in is Canara Robeco Blue-chip Equity Fund Direct-Growth. It has a great ability to control losses in a sinking market.
Since its inception, the Canara Robeco Blue-chip Equity Fund has achieved average annual returns of 14.25 percent.
Q2. Which large-cap fund is best for SIP?
One of the greatest large-cap funds for SIP is ICICI Prudential Large & Mid Cap Fund Direct Plan-Growth. Since its start, ICICI Prudential Blue-chip Fund Direct Plan-Growth has returned 14.6 percent.
The minimum investment amount for this fund via sip is Rs.100.
Q3. Is a large-cap Fund good for the long term?
If you want to increase your money over a long period without experiencing too much volatility, then a large-cap fund is a good choice. When compared to other equity funds, large-cap funds provide strong and consistent long-term returns.
Because market downturns can happen at any time, large-cap funds are the greatest option as investing for a long duration can help the fund to regain its value.
Q4. Which large and midcap fund is best?
Axis Growth Opportunities Fund Direct-Growth is an Axis Large and Mid-Cap mutual fund scheme. The majority of the money in the fund is invested in the financial, services, technology, chemicals, and healthcare industries.
Since its debut, the Axis Growth Opportunities Fund has provided an average annual return of 20.06 percent.
Q5. Which is the best blue-chip fund?
Blue-chip mutual funds are a type of equity fund that primarily invests in shares and equity-related instruments of large-cap corporations.
There are many best blue-chip funds in which you can invest, like IDBI India Top 100 Equity Fund, Canara Robeco Blue-chip Equity Fund, Kotak Blue-chip, and ICICI Prudential Blue-chip Fund, and others.
Here are the Best Blue chip / large cap fund
