Best large cap equity mutual funds to invest in FY 2018 – 2019.
There are many types of Mutual Funds available. Large cap funds are one of them. If you’ve seen mutual fund advertisements, odds are you’ve come across the terms large-cap funds. In mutual funds, the word ‘large cap’ refers to the big market capitalization, or the size, of a listed company. In this article we are going to take a comprehensive look at Large Cap Mutual Funds as an investment option.
WHAT ARE LARGE CAP FUNDS?
Large cap funds are one of the many types of mutual funds available. To understand them first let us know what Large-cap companies are. These are the companies with large market capitalization.
Three adjectives that are often used to describe a large-cap company are
- Reputable and
These are the well-established companies with a good track record. Such companies typically have strong corporate-governance practices and have generated wealth for their investors slowly and steadily over a long term. They are usually among the most highly followed and well-researched on the market. Mutual funds that invest a majority of their investible corpus in these companies are labelled as large-cap funds.
ADVANTAGES OF INVESTING IN LARGE CAP FINDS:-
- Low Volatility: Since they are a part of Equity Mutual fund family, they indeed are volatile, however, in comparison to Small cap and Mid cap funds they are less volatile. They are an avenue for those who want to take advantage of equity investments but do not want their returns to fluctuate more than the market (i.e. Sensex or NIFTY).
- Stable Long-term Returns: Due to the relatively stable nature of large cap stocks, the Large Cap funds offer good returns over long term which are stable in nature and does not deviate much compared to other Equity fund categories. This does not mean that these funds are immune to any downturn but they are more likely to withstand a slowdown.
BEST LARGE CAP EQUITY FUNDS
Birla Sun Life Frontline Equity fund is one of the few funds which have been around for almost 15 years. It has provided consistent returns like no other fund and it has beaten its benchmark year after year. In declining markets it has fallen less than the benchmark which adds to its attractiveness for an investor. This fund has provided 19.35% annualized return in last 5 years while beating the benchmark (BSE 200) by more than four percentage points. The fund can be counted upon for good participation in bull markets but is particularly adept at containing losses in bear markets, be it 2008, 2011 or even 2016.
The fund has beaten its benchmark S&P BSE 100 each time in last 5 years. It has an impressive CAGR of 20.11% in comparison to only 13.85% CAGR of the benchmark. The fund is heavyweight in financial sector with around 31% exposure and has gained from the good performance of the sector. It holds position in its top 2 holdings, viz. HDFC Bank and Larsen & Toubro limited since 2009 which shows the confidence of the fund manager in stock picking.
The fund is true to its name and invests more than 90% of its portfolio in large cap stock as opposed to its peers which take additional exposure in mid cap funds to generate higher alpha. Despite this the fund has performed well and has beaten the benchmark (NIFTY 50) consistently. It has given 17.69% returns in last 5 years while the benchmark returns were only 13.03%.
Let us see the fund performance summary along with some key parameters in the table below
So, to summarize, Large-Cap funds generally offer a stable and sustainable return and they have comparatively lower risk attached to them and hence are considered suitable for first time investors in the market or for the investors who do not want to take much risk while enjoying the benefits of equity investments.
Start Investing in the above mentioned best large cap equity mutual funds on WealthTrust App.
New to Mutual Funds? Learn more about basics of mutual funds here.