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In today’s world, when market is buzzing with talks about returns & investments, it becomes all the more important for the investor to explore different mutual fund options, their returns & possible risk factors.

‘Invest in equity to earn returns’, is an oft-heard investment mantra these days and with good reason. But as an investor, you should also be aware that equity investment comes with its own share of risks.

You will no doubt be rewarded when market is performing,but when the market is down, one should not panic and start redeeming the funds. Instead, a wiser option would be to keep investing, to reap the benefits in the long run.

Large – cap equity funds

Large-cap equity funds is a type of mutual fund that invest a larger proportion of their corpus in companies with large market capitalisation. Large-cap companies are well-established players with a good track record and vintage and they typically have strong corporate-governance practices. Having generated wealth for their investors slowly and steadily over a long term, these corporate houses are always among the most highly followed in the market.To add on, equity is classified in 3 categories in the following manner:

Large-cap Companies – Market cap > ₹10,000 crore

Mid-cap Companies – ₹500 crore < Market cap < ₹10,000 crore

Small-cap Companies – Market cap < ₹500 crore

Here is how the large-cap equity funds have performed in the last 5 years
Benchmark of Large- Cap Equity Funds
1-year returns 3-year returns 5-year returns 10-year returns
30.79% 10.54% 14.62% 7.22%

(As on 29 December 2017)

Who should invest

As mentioned above, large-cap equity funds invest in large firms.Their endeavour is to provide better capital appreciation over a long term and distribute dividends fairly regularly. Large-cap 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). As they are financially strong, they are capable of withstanding bear markets, though there’s a risk that the large-cap might underperform as compared to mid cap or small cap equity fund. Hence, the moto is to keep investing  when market is down to nullify the effect of loss. By saying this, these funds are ideal for risk-averse investors, who want equity exposure to high quality stocks and have a long term investment prospective. Large-cap funds depend on your investment horizon and risk/return objectives – an investment horizon of five to seven years is recommended. This does not mean that these funds are immune to any downturn, but are more likely to withstand a slowdown. So to encapsulate, if you want stability in your portfolio near the redemption horizon, then large-cap funds are more suitable.

Do not expect these funds to perform erratically, as these have several years of history indicating sturdy performance during both market lows and highs. Returns from these funds will be less volatile, which should be the draw when investing in them. Do not feel let down if these funds don’t post high returns even when the market is on peak.

Performance Tracker – Large – Cap
Funds Expense Ratio 1 year 3 year 5 years
Aditya Birla Sun Life Frontline Equity Fund 2.12 29.56 12.03 17.15
ICICI PRU Focused Bluechip Equity Fund 2.08 14.7 11.14 16.66
SBI Bluechip Fund 1.97 29.30 10.63 13.38
Tata Large – Cap Fund 2.23 28.59 10.28 14.36

(Returns as on 29 December 2017)

In a nutshell, large-cap funds generally offer a stable and sustainable return. With comparatively lower risk attached to them, they are suitable for risk-averse or first time investors.


If you had invested Rs 10,000
every month for last 25 years
in equity funds, you could make

₹ 3.3 Crores
at 15%* annual returns

Rs 30 Lakhs

Rs 3.3 Crores

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