What Are Large Cap Mutual Funds?

Large cap mutual funds are the type of Equity Mutual Funds in which most of your invested amount is invested in large cap companies.

These are the top 100 companies in terms of market capitalization and are well-known in their domain. 

As these companies have a great track record, you may receive promising returns over a period of time.

And most importantly, large-cap funds are the safest among all equity MF schemes.

Here’s everything you need to know about large-cap funds before you invest in them.

What is the Investment Regime in Large cap Mutual Funds?

Large-cap companies are ranked in the top 100 on the market capitalization chart released quarterly by AMFI (Association of Mutual Funds in India).

Mutual funds schemes follow this chart to allocate your invested amount to stocks of appropriate companies.

As per the Securities and Exchange Board of India (SEBI) regulations, Large-cap funds must invest at least 80% of total assets in large-cap companies. Fund managers use analytics and experience to allocate remaining assets to either small or mid-cap companies.

Investing in Large-cap funds has many advantages, some of which are listed below.

Top 5 Advantages of Large Cap Mutual Funds

1. Low-Risk and Stable Investment 

Large-cap companies usually have a consistent track record. Being financially stable, these companies offer stability to investors as well. 

It’s very unlikely for these companies to drastically fluctuate with market conditions, making them safer to invest in. 

2. Ease of Information

Large-cap companies are well-established. The financial statements, profitability, and performance of these companies are easily available for you to check. 

Having thorough information about these companies can help you land a good investment decision.

3. Capital Growth

Stock prices of large-cap companies are not as volatile as mid and small-cap stock prices. If you keep the investment horizon for 5+ years, large-cap funds offer higher capital growth.

4. Liquidity 

It’s quite easy and faster to liquidate your assets from large-cap funds. Most equity mutual funds do not have any lock-in period, except for ELSS.

Know more about types of Equity funds.

5. Fight Recession

The effect of recession or falling market is relatively lesser in large-cap stocks. When such a scenario hits, large-cap investment can safeguard your financial goals.

4 Important Points to Consider Before Investing in Large Cap Funds

1. Align Your Financial Goals

Always make sure to match your financial goals with the fund’s goals. Every mutual fund has a fund manager to handle the investments. Make sure the goals set by fund manager for the scheme are suitable for you.

2. The Investment Period

Large-cap mutual funds offer better results for a longer investment period. If you are planning to invest in large-cap, keep your investment horizon between 3-5+ years. You can start a long-term SIP for mutual funds.

Know all the benefits of SIP.

3. Expense Ratio

The expense ratio is a fee charged by the fund house to handle your investment. Please note that a lower expense ratio does not mean higher net returns. Compare the expense ratio with respect to the performance of the fund.

4. Fund Managers

See the investment history of the fund manager to track their success rate. One of the reasons some mutual funds perform better than others is the fund manager. They use industry knowledge and analysis to your benefit. 

Tax Implications

As large-cap funds come under equity mutual funds, the taxation will be the same as any other equity funds.

Investments redeemed before 12 months fall under Short Term Capital Gains (STCG). Investors have to pay a 15% tax on short-term capital gains of large-cap funds.

On the other hand, investments redeemed after 12 months fall under Long Term Capital Gains. In this case, the capital gains over INR 1 lakh will be taxed at 10%. Capital gains below 1 lakh are tax-free.

Who Should Invest in Large Cap Funds?

Investors who are looking for long-term, low-risk, and stable investments can invest in large-cap funds.

Large-cap funds can be a good start for new investors who are not comfortable with market volatility or investors with a moderately aggressive risk profile.


Large-cap funds can turn out to be a valuable investment for your long-term goals. If you have just begun investing and want safer investment options, definitely consider Large-cap funds.

You can also start a SIP and gradually build wealth to achieve your financial goals. The good thing with most equity mutual funds is that there is no lock-in period.

VNN Wealth experts help you build a sustainable investment portfolio. Reach out to us and we will get back to you with suitable advice.


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