What is a Large Cap Mutual Fund? Explained

We all know that the RIGHT investments are the key to our safe and secure future. 

There are multiple choices when it comes to investing in a mutual fund. So, it is necessary for us to choose the Right Investment Products that cater to our needs.

As investors, we always look to seek answers to these types of questions as given below.

• What is the level of risk involved in investing in Mutual Funds

• Why should we prefer investing in Large Cap Mutual Funds?

• What is the probability of me yielding a good return from Large Cap Mutual Funds?

The answer to these questions lies ahead in the article. 

Now let’s talk about large Cap Mutual Funds and their benefits.

Table Of Contents:

1.)What is a Large Cap Mutual Fund?

2.)What are the features of Large Cap Mutual Funds?

3.)What is the suitability of Large Cap Mutual Funds?

4.)How to attain maximum benefits from Large Cap Mutual Funds?

5.)How does taxation work in Large Cap Mutual Funds?

What is a Large Cap Mutual Fund?

Investing in a Large Cap Mutual Fund helps us generate a higher return than the inflation rate. The returns are in the form of capital appreciation in the long run.

In Large Cap Funds majority of the fund is invested in large Cap Companies.

What is called Large Cap Companies?

According to SEBI, large Cap Companies are those which are ranked in the top 100 in terms of stock exchanges. 

What are the features of Large Cap Mutual Funds?

Imagine yourself as an investor who has a family responsibility to fulfil and you want your investment to help you through.

Then investing in Large Cap Mutual Funds can be a good option for you.

Now let’s understand the benefits that we as investors could gain from investing in this category of Mutual Funds.

• The speciality of this mutual fund is that a major portion of the fund is being utilized in purchasing blue-chip stock.  
• Large Cap Mutual Fund is less volatile and does not pose many risks when compared to Small and Mid-Cap. 
• Large Cap Funds have a high chance of yielding good returns when compared to Small and Mid-Cap.
• Since large-cap funds invest in much more financially stable companies, they are capable of withstanding bear markets.

What is the suitability of Large Cap Mutual Funds?

Do you think investing in Large Cap Mutual Funds would help you to achieve your Short Term Financial Goals?

In general, it is not advisable for investors who invests in Mutual Fund to achieve their Short-Term Financial Goals. 

Investing in Large Cap Mutual Fund is the best choice for investors who are likely to take a lesser risk on their equity investments.

How to attain maximum benefits from Large Cap Mutual Funds?

This Large Cap mutual Fund does not suit investors having short-term financial goals. Since these companies are well established the chances of having exponential growth rates are also low.

So, it is best suitable for investors who are having a long-term vision and want to achieve their long-term financial goals.

“I have learned that a willingness to wait longer

 Than other people is your biggest natural edge.” 

                                                   – Morgan Housel

The ideal period for this mutual fund to yield the best benefit is from 5 to 7 years.

How does Taxation work in Large Cap Mutual Funds?

If you are already an investor or new to investing then you should be well aware of the taxation process.

Now let’s know about the taxation part. So, the holding period is one year. If it is sold within a year it is called Short-Term Capital Gain & it attracts 15% of tax. 

But, if it is sold after a year, then it is called Long-Term Capital Gain. Long Term Capital Gain up to Rs 1 lakh in a financial year is exempted from tax. 

If your Long Term Capital Gain is above Rs. 1 lakh is taxed at 10% without indexation advantage.

Investors who are looking for steady returns with relatively lower risk can opt for large-cap mutual funds.

To get even more insights about Large Cap Mutual Funds, watch this video below: 

What is a Large Cap Fund? – Watch here!