Nippon Large Cap Fund Joins Rs 50,000-Crore Club With AUM At Rs 50,312 Crore | Markets News

Large-cap mutual funds are generally considered a safe haven for new and risk-averse investors.

Nippon India Large Cap Fund has entered the Rs 50,000-crore assets under management club. The fund now joins ICICI Prudential and SBI, whose large-cap funds have assets under management (AUMs) of more than Rs 50,000 crore. This comes despite the soft flows in equity mutual funds, which is largely attributed to profit booking post the recent market rally and the impact of liquidity needs which rise during the festive season.

Large-cap mutual funds are generally considered a safe haven for new and risk-averse investors. The reason is the investment portfolio of these funds. These funds invest in blue-chip companies that have robust business models and typically are leaders in the sectors they operate in. Hence, these funds are inherently stable and resilient to economic downturns and market fluctuations, when compared with mid and small-cap mutual funds.

In the last few years, large-cap mutual funds have been star performers. The Nippon India Large Cap fund has given returns of 19.04% and 21.75% in the last three and five years, respectively. In the same period, ICICI Prudential Large Cap fund (17.86% and 19.20%) and Invesco India Large Cap gave returns of 17.49% and 17.91%.

The Nippon India Large Cap Fund follows the philosophy of investing over indexing where the fund manager seeks to outperform the benchmark index, ensuring growth at reasonable prices. The fund’s backbone is Nippon’s famed research repository and the investment mix is derived from here.

Market experts say that large-cap mutual funds are generally the backbone of mutual fund investing as they are expected to provide relatively consistent and stable returns over the long term and potential regular dividends.

Besides, the companies that comprise large-caps are highly traded on stock exchanges, ensuring high liquidity, allowing fund managers to trade on the go without causing major price fluctuations. And, since large-cap mutual funds invest across a wide range of established companies across sectors, these funds come with a built in diversification, reducing the impact of a below par performance in any single company or sector.

Interestingly, large caps also drive over 65% of India’s market cap, 60% of BSE 500’s revenue and about 65% of its profits. Large-cap mutual funds are ideal for long-term financial goals such as retirement planning or building a strong portfolio.