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    FinanceLarge-Cap Equity Funds: Basics, Benefits and More

    Large-Cap Equity Funds: Basics, Benefits and More


    In today’s world, everyone wants to start investing in the mutual fund spectrum. But the question arises: How do we do it? We can do this by picking the right mutual fund and asset management company. In this post, we will discuss large-cap mutual funds, how they work, and the major benefits they offer. Buckle up, folks! Since this is going to be a thrilling ride into your investment portfolio.

    Firstly, let us get the basics right.

    What are Large Cap Equity Funds?

    Large-cap equity funds are mutual funds that primarily invest in stocks that have a large market capitalization. These kinds of companies usually involve a market cap that is higher than Rs. 1000 crore. Large capitalization companies are usually low in risks and low in returns. Equities, on the other hand, are known to be risky. If you are wondering how that works, we are here to tell you.

    Large-cap equity funds would give you the opportunity to invest in large capitalization companies while participating in the equity market. Here is how they work in order to balance out the low risk and returns of large capitalization companies while still holding on to features of equity.

    How Does a Large Cap Equity Fund Work?

    You must have heard that you can always trust a top-rated AMC to get you hitched with the best Large Cap Equity Funds. For instance, Groww Large cap fund can help you to kick start your investment.  But wouldn’t you want to understand how these investment tools work?

    The primary objective of the large-cap equity fund is to achieve capital increase by investing in well-established companies. These funds aim to offer returns that showcase the performance of the large-cap segment of the stock market.

    Features of a Large Cap Equity Fund

    Let us now understand the important features of a Large Cap Equity Fund:

    1. Risks: Compared to small or even mid-cap equity funds, these funds are generally known to hold lower risks, providing the stability and financial strength of large-cap firms.
    2. Returns and Rewards: While they would provide a lower growth potential than smaller companies, large-cap stocks would offer moderate returns through capital growth and dividends.
    3. Diversification: Large-cap equity funds usually diversify their investments in different sectors. These sectors could include tech, healthcare, consumer goods, financials, and more. Moreover, large-cap equity mutual funds invest in large-cap companies across varied countries to diversify geographic risks.
    4. Dividends: Generally, several large-cap companies offer frequent dividends. These dividends could offer a steady income stream for the fund. The money could be distributed to investors or invested back into the scheme to enhance the overall returns.
    5. Expenses of the Investment: Actively managed funds hold a higher management fee because of the costs associated with active stock options and research. On the other hand, passively managed funds would have much lower fees. Whether it is active or passive funds, operational expenses like administrative fees and custodial fees are included.
    6. Performance and Benchmarking: The performance of large-cap equity funds is usually benchmarked against major indices like the S&P 500 or other large-cap indices. Fund houses offer frequent updates on holdings, strategy, and performance through their annual or quarterly reports.
    7. Suitability: Large-cap equity funds are suitable for investors who want relatively lower-risk exposure to the stock market and the potential for moderate growth opportunities and income. These funds are frequently utilized like core holdings in a diversified portfolio, which provides long-term growth and stability.

    Perks of Investing in a Large Cap Equity Fund

    The  major benefits of investing in large-cap equity funds are:

    1. Stability: Large-cap companies are usually well established, financially stable, and also have an extended track record of performance. The stability lowers the risk when compared to investing in small or even mid-cap funds.
    2. Lower Risks: These companies often dominate their respective industries, which provides a buffer against economic movements.
    3. Exposure to Various Sectors: Large-cap equity funds invest in different sectors, reducing the impact of poor performance in one particular industry.
    4. High Liquidity: These funds are usually highly liquid, and they can be bought and sold easily without significant impact on the stock price. Shares of large-cap equity funds could be traded on a stock exchange on a trading day, which provides flexibility and accessibility.
    5. Potential for Growth: Irrespective of the lower risks, these funds come with great growth potential through their capital appreciations. Previously, large-cap companies have shown a lot of steady growth over time, and this eventually contributes to long-scale portfolio growth.
    6. Professional Management: In actively managed funds, professional fund managers utilize their expertise to choose stocks that are estimated to outperform the market. Any fund manager would conduct in-depth research and analysis to make investment choices that are capitalizing and procuring enough for the investor’s investment, time, and effort.
    7. Cost Efficient: Passively managed large-cap equity funds would often have low expense ratios, and this makes cost-efficient choices for investors. Large-cap equity funds grow from an economic scale, lowering per-unit costs for the investor.
    8. Easily Accessible: Large-cap equity funds are famously known to everyone, not just that – they are also available easily. You can purchase these funds through different platforms, including mutual fund companies, brokerage firms, and retirement accounts. You could choose from a broad range of equity funds, and this involves actively managed funds and passively managed funds.


    Investing in large-cap equity mutual funds is a sort of blend of stability, growth, potential income, and much more. It is a valuable tool if you are looking to diversify your portfolio. So, if you have made a choice to invest in large-cap equity mutual funds, that would be great going. Watch your money grow!




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