There are numerous aspects that have to be considered before proceeding further to mutual fund investments. First, the investor has to check if the fund is compatible to his profile; next he has to check if the fund has performed well in the past; and then he’ll speculate the likely gain in the future that he may get from the fund. Large cap funds are one such kind of equity mutual funds that have all these qualities present in them. Their performance has been superb in the recent years, and they are also a good source of protection from the market risks.
There are several other features that make these funds a worthy candidate of investment, a few of which have been discussed in this article.

What are Large Caps?

Before we hop on to discussing the features of a large cap fund, let’s discuss its definition first. Large cap funds are a type of equity mutual funds that prefer investing in large, established companies. These companies normally weigh between ₹500 - ₹10,000 crore, and enjoy a superb reputation in the market. They are usually older than mid-sized companies, and have huge prospects of expansion in the future which makes them one of the best areas to make mutual fund investments.

What are their benefits?

Large cap funds dwell a horde of benefits, which makes them one of the most versatile areas of investment. They are a combination of energy and endurance, which makes them the favourite choice of both seasoned and newbie investors. Here are some of the most attractive features of large caps: -

  1. Superb Growth Prospects : As stated earlier, large caps mostly invest in large companies that have an established name in the market. They typically hold a large market value and also enough liquidity to power further expansion. This makes them one of the most growth-oriented areas of investments, and hence, can be chosen for making a high energy portfolio geared towards growth in the long run.
  2. Excellent Rewards : If you are investing in a top-performing large cap fund, then the chances are that you’ll be showered upon with high returns throughout your investment period. These funds, besides being strong, are also highly agile which makes them one of the highest paying funds in the investment regime. As per record, the top large cap funds in India have yielded returns to the tune of 15% in just the last five years. This is a phenomenal score considering the nature of performance of these funds and the corresponding market situations.
  3. Good Risk Cover : When starting a mutual fund investment, it is always better to incorporate at least one top-performing large cap fund in your portfolio. Large caps are known for their inbuilt nature to fight away high risks. This makes them a highly efficient option to create a robust portfolio that can take on heavy risks from the market. Not only newcomers, but experienced investors too show great interest in these funds as they allow them to create more wealth in a systematic manner, without suffering from much hassles.
  4. Great Source of Diversification : When planning a mutual fund investment, it is deemed sine qua non to incorporate different variety of funds to ensure there is sufficient diversification in the portfolio. This in turn makes the portfolio versatile, thus allowing it to perform under all market conditions. Large cap funds are a superb source of diversification, as they provided the maximum risk cover out of all category of equity mutual funds. Hence, it is essential to include these funds in your portfolio, no matter if you are an old investor or have just begun playing this game.

Mutual fund investments are more of a mind game; they require planning and strategizing more than just your money. And, if you are adding large caps to your portfolio, you are lacing your financial plan with more energy to work longer, till all your objectives are accomplished. So, go out there and make an infallible plan that contains some of the best large cap funds.

Summary: This article explains in brief the various features of large cap funds in India.

Author's Bio: 

Dishika is a copywriter and voice over artist. She now devotes most of her time writing articles on mutual funds and other trending topics on finance for the online investment portal, MySIPonline.