Mutual funds are subject to market risk, but they are less risky when money is invested large-cap mutual funds.
There a numerous mutual funds present in the market.
Normally there are three types of mutual funds that can be listed as:
- Small-cap mutual funds
- Mid-cap mutual funds
Funds that are mostly invested in large companies that have large market capitalization are known as large-cap mutual funds.
In India, large-cap stocks are the ones that have a market cap of Rs.10,000 crore and more.
Large-cap mutual funds are the safest bet when it comes to considering the risk parameters.
While small-cap and mid-cap funds have a high-risk factor, they offer good results over a small tenure— offering stable and good returns over a period of time, that are the characteristic of the large-cap mutual funds.
As per the reports, there are about 77 large-cap funds in the Indian share market, inclusive of the Sensex and Nifty index funds.
Pros of Large Cap Mutual Funds:
- Survival in unfavourable market conditions:
Investing in reputed and big companies of India implies that these companies will survive in case of any downtrend in the ever-fluctuating market conditions.
- Represented and Tracked Well:
Big blue-chip companies are renowned and the stocks of such companies are frequently tracked on all the reputed market indices, so no misguiding can occur when it comes to the statistics of these stocks.
Investment in large-cap mutual funds involves less risk; meaning, good returns over are enjoyed a period of time.
- Cons of Large Cap Mutual Funds:
- Fewer returns:
Keeping the risk factor at bay, large-cap mutual funds, however, do not provide higher returns as compared to small cap and mid cap mutual funds.
So, for people who can invest their money and time both and want to survive the irregularities of the market can opt for large-cap mutual funds.
Mutual Fund Houses like Quantum Asset Management advises the investors with low risk taking appetite to opt for the top-performing large-cap mutual funds.
Hence, if you are not an aggressive investor, then your go-to option is large-cap mutual funds.