mutual fund investment
Nippon India Large Cap Fund has entered the Assets Under Management (AUM) club of Rs 50,000 crore. Now this fund has joined the list of large cap funds of ICICI Prudential and SBI, whose assets under management (AUM) are more than Rs 50,000 crore. This achievement has been achieved despite lower inflows into equity mutual funds, mainly due to profit-booking after the recent market rally and the impact of increased liquidity needs during the festive season.
Large cap mutual funds are considered a safe investment option for new and risk-averse investors. The reason for this is the investment portfolio of these funds. Large cap funds invest in blue chip companies with strong business models and usually leaders in their respective sectors. Therefore, these funds are naturally more stable and resilient to economic downturns and market fluctuations as compared to mid and small cap mutual funds.
gave strong returns like this
Large cap mutual funds have performed brilliantly in the last few years. Nippon India Large Cap Fund topped the category, delivering returns of 18.46% and 22.43% in the last 3 and 5 years respectively. Over the same period, ICICI Prudential Large Cap Fund (17.46% and 19.98%) and Invesco India Large Cap returned 16.68% and 17.67%, respectively.
What is the reason for strong returns?
The main reason for the success of Nippon India Large Cap Fund is that it follows the principle of investment rather than indexing, where the fund manager strives to outperform the benchmark index, thereby ensuring growth at a fair price. The base of the fund is Nippon’s renowned research stock and the investment mix is derived from here.
What do experts say
Market experts believe that large cap mutual funds are the backbone of mutual fund investing as they provide relatively stable and consistent returns and potentially regular dividends over the long term. Moreover, shares of companies with large capital bases are highly listed on stock exchanges, thereby ensuring high liquidity and fund managers can trade the shares easily without any major price fluctuations. Also, since large-cap mutual funds invest in established companies from different sectors, they have built-in diversification, which reduces the impact of poor performance by any one company or sector. Interestingly, large cap mutual funds contribute more than 65% of India’s market capitalisation, 60% of BSE 500’s revenues and almost 65% of its profits. Large cap mutual funds are ideal for long-term financial goals like retirement planning or building a strong portfolio.