What are the advantages of investing in large cap mutual funds?
large cap funds as a core holding in their portfolio as such companies are better prepared than smaller companies to manage risk. Investors can participate in such companies using mutual fund schemes.
How can an investor take exposure to large cap stocks using mutual funds?
Large cap stocks are present in several mutual fund categories. While large cap funds have a minimum allocation of 80% to large cap stocks ranked 1-100 by market capitalisation, multi cap schemes need to have a minimum allocation of 25% to large caps. Although flexi cap and focused schemes are free to choose stocks based on the fund manager’s view of the market, most schemes end up allocating 50-70% to large cap stocks. There are many passive mutual fund schemes that mimic the index and give exposure to large cap stocks. Passively-managed schemes that track the Nifty 50, S&P BSE Sensex, Nifty Next 50, Equal Weight Nifty, and Nifty 100 have a portfolio of large cap stocks.
What advantages do actively-managed large cap funds offer over passive funds?Passive funds invest in stocks in the same proportion of the index that they track. They have a low cost compared to active funds. However, actively managed funds give flexibility to buy stocks and allocate on the fund manager’s view of the market. The fund manager is free to decide the allocation to each stock in the portfolio, with the maximum allocation to a single stock at 10%. Based on the fund manager’s view of the market and valuations, s/he is free to exclude any stock or have a low weight.
Best MF to invest
Looking for the best mutual funds to invest? Here are our recommendations.
View Details»
What is the advantage of investing in large cap stocks over mid and small cap stocks?Large cap stocks are
