Large caps are the darlings of the stock market, aren’t they? That’s understandably so because large-cap companies are usually the market leaders and have proven businesses models. If you’re looking to invest in large-caps via mutual funds, you might want to consider the Principal Large Cap Fund. The fund focusses on large-cap companies of both Indian and US companies.
In fact, it is the first large-cap fund that will invest in the large-cap stock of the domestic market (India) and the International market (US). Around 80-85% of its assets will be invested in the Indian market while up to 15% will be allocated to US companies which have a market capitalisation of $50 billion or more. The new fund offer (NFO) closes on 12 October 2020, and here’s a quick brief on it.
Investment objectives
The fund aims to deliver long term capital appreciation by investing in a diversified portfolio, predominantly consisting of equity and equity-related securities of large-cap companies. The securities include derivatives. The fund will invest in top-100 Indian companies by market capitalization and top USA companies with market capitalisation greater than $50 billion.
Here are some highlights of the fund.
- The addition of S&P500 companies into the fund’s portfolio could reduce volatility in returns.
- The fund could benefit from potential rupee depreciation.
Those who apply during the NFO period get to use two more features: ‘Smart’ and ‘My Gain’.
Smart:
- 25% of the investment goes into the Principal Large Cap Fund and 75% into Principal Cash Management Fund. The latter is a low-risk fund that parks money in debt and money market instruments, with maturity not exceeding 91 days.
- In the subsequent month/s, if the market falls below 3% from the date of allotment, the Smart facility gets activated and 25% of the invested amount is deployed in Principal Large Cap Fund.
- In case the market does not fall, the switch takes place at month-end from Principal Cash Management Fund to Principal Large Cap Fund automatically.
My Gain:
- During the NFO period, you set a target return rate on your investments.
- When the investment appreciates and reaches the target rate of return, your units get redeemed from the Principal Large Cap Fund and you can switch the redeemed amount to any Principal offering of your choice.
To read more about the product’s features, kindly refer to the fund’s presentation document.
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Asset allocation
| Instrument | Indicative Allocations (% of total assets) | Risk Profile | |
| Minimum | Maximum | ||
| Equity and equity-related instruments of large-cap companies | 80 | 100 | High |
| Equity and equity-related instruments of other companies | 0 | 20 | High |
| Debt and money market instruments including units of debt & liquid schemes | 0 | 20 | Low to medium |
Scheme details
| Name | Principal Large Cap Fund |
| Type | An open-ended equity scheme predominantly investing in large-cap stocks |
| Category | Large-cap mutual fund |
| Investment objective | To achieve long term capital appreciation by investing a portfolio predominantly consisting of equity and equity-related securities of large-cap companies including derivatives. |
| Benchmark | Nifty 100 TRI** |
| Entry/Exit Load |
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| Fund managers |
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| Plans | Regular and Direct |
| Options (under each plan) | Growth & dividend |
| Minimum application amount | ₹5,000/- for both Dividend and Growth Option and any amount thereafter under each Plan/Option. |
| Additional application amount | ₹500/- or 50 units or account balance whichever is less |
| Maximum total expense ratio | Up to 2.25% |
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This product is suitable for investors who are seeking*:
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*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
Note: The above information has been sourced from the Scheme Information Document provided by Principal Asset Management Private Limited. To read the entire document, click here.
Disclaimer:
The above article is purely academic in nature and aims to provide knowledge about basic trading concepts & should not be construed as an opinion or advice to invest or trade.
RKSV Securities India Private Limited (brand name Upstox) is the distributor of the mutual fund.
Mutual fund investments are subject to market risks; please read all the related documents and/or consult your investment advisor before investing.
Past performance of an investment asset does not guarantee future returns.