Large Cap Mutual Funds: What You Need To Know

Investing in mutual funds can be really favourable for individuals who are willing to give something to gain something. If you are an investor looking for a stable long-term but higher growth, Large Cap Mutual Funds are a way for you to go.

In this article, you will study what large cap funds are, their rules, advantages and disadvantages.

Let us get started with understanding the meaning behind large cap funds.

What is a Large Cap Mutual Fund?

A large cap mutual fund is a type of the mutual funds, this fund generally invests  in the large cap stocks or companies and provides higher growth in long-term horizon.

These large companies are generally well established firms with top market capitalizations. These funds are generally suitable for the investors looking for stable returns & long term growth with lower risk profile.

Large cap funds also provides diversification to its investors by investing in multiple large cap stocks. These stocks have a strong track record and are normally less volatile than small cap mutual funds.

What are Rules for Large Cap Mutual Funds?

Large Cap Mutual Funds invest most of their assets in equity funds of large cap companies. Described below are some key rules that you need to follow when investing in these funds:

Investment Allocation

At least 80% of the assets of large cap funds must be invested in equity funds and equity values.

The large cap companies are those who are ranked from 1 – 100 on the basis of market capitalization.

Taxation

The profits gained through large cap funds are restricted to capital gains tax.

Short term capital gains are taxed at the rate of 15%.

Long term capital gains are taxed at the rate of 10% if the gains exceed the limit of Rs 1 lakh.

Liquidity

These funds offer high liquidity allowing their investors to purchase or sell capital without affecting the fund’s values.

There is no commitment period allowing investors to recover their investment at any time during market hours.

Expense Ratio

The expense ratio is a fee that is used for managing the funds. It is charged by mutual fund houses.

The cost or expense ratio varies for different schemes and needs to be considered when investing.

Minimum Investment

You can start an investment at a price as low as Rs 100 depending on the various schemes.

Investors can also go for a SIP (Systematic Investment Plan) for regular handouts.

Investment Duration

The large cap funds are likely to offer stable returns and growth over time.

The investors are recommended to continue to invest for a longer duration (at least 5-10 years).

5 Best Large Cap Mutual Funds India for SIP

In this section, you will explore the top best performing large cap mutual fund. These funds are highly recommended for investment in 2025:

• ICICI Prudential Bluechip Fund Direct Growth– This fund is known for its consistent performance and strong portfolio.
• Nippon India Large Cap Fund Direct Growth– This fund offers a diversified approach with a focus on large-cap stocks.
• Axis Bluechip Fund– This fund is recognized for its robust returns and low expense ratio.
• Canara Robeco Bluechip Equity Fund– This fund is a solid choice with a focus on blue-chip companies.
• Mirae Asset Large Cap Fund– This fund is popular for its strong management and performance track record.    

What are the Advantages of Large Cap Funds?

 If you are wondering why should you invest in large cap mutual funds only and what they have to offer you? In this part, you will get the answers to your questions.

Stability and Lower Risk

Large cap companies are generally more stable and well established which lower risks associated with the investments in this funds.

Consistent Returns

These financially stable companies provide more consistent returns with time as they have their proven track records.

Liquidity

Large cap mutual funds offer more liquidity as they have higher transaction values which allows them to buy and sell stocks without worrying about fund’s prices.

Diversification

Large cap stocks consider investing in different sectors which results in spreading the risk and reducing risk  related to a specific sectors.

Professional Management

These funds are typically managed by fund managers who are professionals in their expertise and have a lot of experience to help you with your investment planning.

Dividends

Many large cap companies tend to provide dividends that is some bonuses that provide a chance for the investors to earn some extra money.

Long-term Growth Potential

Large cap companies may not contain the growth potential of small cap stocks,but still they can provide long term capital appreciation, specifically in the growing economy.

Listed here are some key advantages of large cap funds:

What are the Disadvantages of Large Cap Funds?

Everything has a good and a bad side of itself, same goes with the mutual funds. Although they are a great choice to earn extra income, they also come with some risks.

Some disadvantages of large cap funds are:

• These companies are more mature which can limit their growth as compared to small caps.
• These companies can still be sensitive to changes in market values and economic conditions.
• Some large cap mutual funds can have higher expense ratios in comparison with index funds.
• They may be concentrated on investing in a few large cap companies only.
• They may have less flexibility in their investment strategies than small companies.
• The dividends provided by these companies may be lower than smaller companies that reinvest profits for growth.
• Large cap companies may underperform compared to small cap companies in specific market conditions.
• Large cap companies may be less innovative than small companies.
• Large cap companies are often concerned with more regulatory examinations.
• These stocks may attract a large number of investors making the popular stocks really crowded.

Conclusion

In short, large cap mutual funds are a great way for investors looking for stable and higher growths with lower risk mitigation. Starting a SIP in these large cap funds can prove to be a big step toward your long term but stable growth.

Large cap funds provide many beneficial factors like professional management, diversification, liquidity and lower risk to investors in order to generate high returns over time.