Top 5 Large Cap Mutual Funds
Below is the list of best performing Large cap mutual funds to invest in India.
| Name of Fund | 5 Year Returns (p.a.) | Scheme Category |
|---|---|---|
| Axis Bluechip Fund | 13.50% | Large Cap |
| ICICI Prudential Bluechip Fund | 12.90% | Large Cap |
| Mirae Asset Large Cap Fund | 13.76% | Large Cap |
| SBI Bluechip Fund | 14.01% | Large Cap |
| Kotak Bluechip Fund | 14.24% | Large Cap |
What are Large-Cap Funds?
Large-cap funds are mutual funds that invest in companies with large market capitalization. Large-cap companies are some of the most reputable and significant brands in our country and constitute the top 100 corporations in its segment. Reliable brand equity, strong corporate practices, competitive advantage, and well-established track record are some of the features that make these companies a viable option for investors looking for steady returns at low risk.
Examples of large-cap entities include – Ambuja Cement, HDFC Bank, Ashok Leyland, Wipro, DLF, and more.
Who should invest in Large-Cap Funds?
Capital returns from large-cap funds do not fluctuate according to the market conditions, which makes them a prudent choice for risk-averse investors. Furthermore, large-cap funds are financially secure and are invested in organizations that are less likely to become insolvent over time. Hence, it can be a perfect bet for investors aiming for long-term but a less-risky investment.
Also, since these funds ensure steady returns over at least 5 to 7 years, early-stage investors can use these funds to meet their retirement planning goals.
What points are to be considered before investing in Large-Cap Funds?
- Investment horizon – Large-cap funds rely on the duration of your investment. People who wish to invest in such funds for a medium to long term (at least five to seven years) are more likely to witness huge returns over time.
- Investment risks – Like other mutual funds, large-cap funds are also subject to various market risks. However, these risks tend to be in a moderate way. Unlike small-cap/mid-cap funds, the Net Asset Value (NAV) fluctuations are relatively less aggressive and small.
- Expense Ratio – Large-cap funds charge a fee to manage the investor’s money called an expense ratio. Since these funds provide lower returns as compared to small-cap/mid-cap funds, a lower expense ratio with long investment horizon would help in generating higher returns in future.
Top 5 Balanced Funds
Below is the list of best performing balanced mutual funds to invest in India.
| Name of Fund | 5 Year Returns (p.a.) | Scheme Category |
|---|---|---|
| HDFC Balanced Advantage Fund | 11.37% | Dynamic Asset Allocation |
| ICICI Prudential Equity & Debt Fund | 12.78% | Aggressive Hybrid Fund |
| DSP Regular Savings Fund | 9.22% | Conservative Hybrid Fund |
| Axis Regular Saver Fund | 9.50% | Conservative Hybrid Fund |
What do you understand by balanced funds?
The balanced funds are the funds that provide a combination of capital growth and moderate-income by investing in the balance of equities, bonds and debt securities.
As an asset class, equity and debt play an important role in creating long term wealth for an investor. Investment in equity brings an opportunity for capital growth through stock price appreciation and dividends, while debts portfolio provides stability through fixed income and capitals gains on bond prices.
What are the main benefits of investing into these funds?
There are various key benefits of investing in balanced funds:
- Diversification - One of the main advantages of investing in a balanced fund is a mix of debt and equity investment. Diversification between equity and debt protects the portfolio from downside risks, if equity or debt enters a recession. While equity has the potential to deliver better long-term returns, the debt provides stability to the portfolio.
- No manual rebalancing of asset allocation – In line with the investment goal, investors need to separate their equity and debt investments from time to time. However, this can be a tedious practice, besides it has implications for tax and cost (imbalance).
Market sentiments are meant to drive asset allocation decisions, if done manually, which may not be in the best interests of investors. These challenges can be avoided by investing in a balanced fund as the fund manager is responsible for asset allocation and portfolio rebalancing and investors benefit from both equity and debt by investing in a fund.
- Tax benefits – Most balanced funds carry at least 65% risk in equity, allowing them to be taxed like equity funds. These funds enjoy tax-free returns for a period of more than one year upto Rs.100,000 in a financial year. Also, above Rs.100,000 long term capital gain, the tax rate is 10% only.
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