What are large cap funds?
Large Cap Funds are open ended equity schemes predominantly investing in large cap stocks. The scheme should invest minimum 80% of the assets in equity and equity related instruments.
Large cap funds invest in large cap companies. As per SBI re-categorization, Large cap funds typically invest in 1st to 100th company in terms of market capitalization.
Why one should invest in Large cap funds?
Large cap funds invest in stocks of large blue-chip companies with stable performance and returns. For example: Infosys, ITC Ltd. etc. As large cap companies are financially strong, they are capable of withstanding bear markets. These funds are less volatile as compared to mid and small cap category.
Also, Large cap funds provide superior returns for a period of 5 years and above. The average category return of large cap funds is ~14% which is far better than any other asset class.
Invest in Large Cap Funds to get better returns
Who should invest in Large cap funds?
Large cap funds are ideal for conservative equity investors who want to invest for a period of minimum 5 years. Large cap funds are for investors those who want to take equity exposure but do not want their returns to fluctuate more than the market.
Also, large cap funds provide avenue for those investors who want stability to their investments near the redemption horizon.
What is tax implication on large cap funds?
Since large cap funds invest more than 80% in equity and equity related instruments they carry taxation under equity oriented schemes. Gains earned on equity oriented schemes are taxable depending on holding period. Gains on investment horizon of upto 1 year are called short term capital gains and tax rate applicable is 15%.
Gains on Investment horizon of more than 1 Year are called Long Term Capital Gains. LTCG over and above Rs.100,000 are taxable at 10% without indexation.
Available Large Cap funds
How to invest in Large Cap Funds:
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