Large cap funds are the type of mutual funds available in the market. The mutual funds which invest a big proportion in companies having huge market capitalization are called large cap funds. The main feature of the large cap funds is the tremendous market capitalization.
Understanding all the aspects of these funds is important before you invest. The term ‘cap’ means market capitalization of the particular stock. Market capitalization is the value of the stock. The value is the result of multiplication of the outstanding number of equity shares of the company with its stock price. Stable returns are the main attraction of this type of funds.
Key Features of Large Cap Mutual Funds
Though there are no definite criteria for such companies, these key features are self-explanatory.
- The large cap funds belong to the well-established companies like Infosys and Wipro.
- The companies are reigning the market for many years.
- The information of such companies is easily available with media.
- Investor finds it easy to access any data of these companies.
- The investments in the large cap companies are considered very safe.
- They help you realize stable returns over a period of time.
- Low risk with average returns is the prime feature.
- These companies are trading their stocks publicly.
Sometimes it is possible that mid cap and small cap companies beat the large cap firms. But they have a higher risk.
Why Large Cap Funds Are Safe
Large cap funds offer good chances for stable as well big profit. Their predictable nature makes them safe for the investors. Though they give average returns, overall their performance is better. As these funds are low-risk, they are good for investments in unstable times. Even if the market is bad, you gain fair return from these funds.
The large cap companies are good for long term investments. You can easily check the positions of these firms in the market. The funds are less affected by the poor market conditions.
Investing in Large Cap Funds
If you are a beginner in the share market, this is one of the best options for you. It is easy to avoid risks in the beginning with this mutual fund. An investment portfolio should be a right mix of a different category of funds. Regardless of the market trend, an allocation in large cap funds is good. It gives a good stability factor to your portfolio. Much depends on your tendency. While some investors want to take the risk for high profits, some prefer long term investments with low risks.
A good research and strategy can make give you profitable returns from this segment. Learn which large cap funds are more flexible than others. Some funds have good scope for investing in upcoming large-cap funds. All these analyses make a big difference to your overall returns from the investment. Choose the funds to stabilize your mutual fund investment portfolio. With a certain amount of stability, you can take a bearable risk with mid cap and small cap.
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If the market trend prediction is volatile, it is good you stick to the large cap funds. Follow our blog for more tips on mutual fund investment. We will continue updating our readers with best investment know-how.