Large Cap Mutual Funds

Before considering an investment in large-cap funds, it's crucial to take the following factors into account:

Risk and Return
Market conditions impact all equity mutual funds. As the scheme benchmark fluctuates, the Net Asset Value (NAV) also experiences ups and downs. However, unlike small-cap and mid-cap schemes, the NAV of a large-cap fund tends to be more stable. Investing in large-cap schemes provides stability to your investment portfolio. Although returns from these schemes are typically lower than those from mid-cap or small-cap funds, they offer a lower risk exposure, making them suitable for investors seeking stable returns.

Not Suitable for Short-Term Investors
During market downturns, large-cap funds may also undergo underperformance. However, due to investments in financially robust companies, this underperformance tends to average out over time. Generally, it is advised that investors with a long-term horizon, exceeding seven years, can expect returns of approximately 10-12%. Consequently, these mutual funds are more suitable for individuals with a long-term investment perspective.

Consideration of Financial Goals
Large-Cap Mutual Funds involve a reasonable level of risk while offering stable returns. Therefore, many investors turn to these schemes when planning for retirement. Additionally, investors looking to gain exposure to equity markets without taking excessive risks often opt for Large-Cap Mutual Funds. Before making any investments, it is essential to align your financial goals with the characteristics of these funds.

Certainly, profits derived from holding Large-cap equity mutual funds for over 12 months are subject to a 10% tax rate. Nevertheless, gains up to ₹1 lakh remain entirely tax-exempt. If the investment duration is less than 1 year, the applicable tax rate increases to 15%.