Large Cap Mutual Funds

Investment in Large Cap Mutual Funds is an effective choice for investors seeking growth and stability. These mutual funds invest in large and established companies that have a strong market position. Large cap mutual funds are ideal for investors seeking comparatively low risk when compared to mid cap and small cap mutual funds.

What are Large Cap Mutual Funds?

Large Cap Mutual Funds are equity mutual funds that invest primarily in the stocks of large-cap companies. Large cap companies are the best performing companies in the market according to their market capitalisation. Large cap companies have a proven business model, sound financials, and better management. By investing in these funds, investors get exposure to a diversified portfolio of leading companies across different sectors.

Features of Large Cap Mutual Funds

• Investments in Large Companies: The large cap mutual funds invest in big companies that are industry leaders.
• Lower Risk Compared to Mid and Small Cap Funds: Larger companies tend to be more stable than other firms, which can limit the effects of market fluctuations.
• Wealth Creation Over Time: The Large Cap Mutual Funds strive to make profits through long-term growth of leading businesses.
• Professional Fund Management: Professional fund managers make investment decisions after conducting market research and analysis.
• Portfolio Diversification: Your money is distributed among several different companies and industries. Hence, your funds are invested in well diversified manners.

How to Invest in Large Cap Funds?

You can invest in large cap funds by following simple process:

Step 1: Choose investment mode. You can invest through:

• AMC websites
• Online investment platforms provided by stockbrokers
• Mutual fund distributors

Step 2: Choose a suitable large cap fund.

Step 3: Choose between Systematic Investment Plan (SIP) and Lump sum based on your goal and make investment.

Step 4: Make payment through UPI, netbanking or other available methods.

Why to Invest in Large Cap Funds?

• Prospects of Stability: Large companies usually have a solid track record in terms of their finances and standing in the market.
• Prospects of Long-Term Growth: These investments can capitalise on the growth of big businesses over time.
• Prospective for Beginners: They are relatively simpler for investors who are new to investing in stocks.

Taxation Rules for Large Cap Funds

Large cap mutual funds fall into the category of equity-oriented mutual funds as they invest in large cap stocks. Hence, large cap funds are subject to the laws for equity mutual fund taxation.

• Short-Term Capital Gains (STCG): If units are sold within 12 months from the date of purchase, the profits will be considered STCG, which shall be taxed at 20%, with applicable surcharge and cess.
• Long-Term Capital Gains (LTCG): Profits made from selling units after 12 months will be considered LTCG. Profits made from these funds beyond ₹1.25 lakh in a fiscal year will be taxed at 12.5%, whereas LTCG up to ₹1.25 lakh is tax-exempt.