Mutual funds: Investment ideas for large-cap fund traders

Mutual funds funding: Large-cap mutual funds spend money on top-ranked corporations primarily based on market capitalisation. These funds present secure returns over the long run, and are often related to decrease threat than different kinds of fairness funds.

As per cash specialists, index investing is the only and most cost-effective strategy to spend money on large-cap funds for retail traders. The finest a part of this strategy is that traders would not have to trouble about timing the market and might begin every time they’re prepared after protecting their fundamentals.

Start with index funds, counsel specialists

“Index funds cost a lot decrease expense ratios, i.e., 0.3%-1.5%, than actively managed mutual funds. Since these funds mimic their benchmark index, there is no such thing as a vital distinction within the efficiency of two funds monitoring the identical benchmark, apart from the monitoring error. While deciding to spend money on an index fund, traders can select a fund home that provides the bottom expense ratio and monitoring error,” Ajinkya Kulkarni, Co-Founder and CEO, Wint Wealth.

While investing in large-cap funds it is better to allocate the majority of your allocation through the passive route, suggested Mukesh Kochar, National Head – Wealth, AUM Capital.

Why large-cap funds find it difficult to beat benchmark indices?

There is little room for the fund manager to outperform the index by a wide margin and the predictability of sectors is very difficult. Exceptions are always there though. So better to allocate the majority of your large-cap allocation through NIFTY ETF or Index fund and a small portion can be allocated to funds that take some deviation from the index weightage, added Mukesh.

How to get exposure to India’s top 100 listed companies?

As per Ajinkya Kulkarni, depending on their risk appetite, investors can either go with a Nifty 50 index fund or a combination of Nifty 50 and Nifty Next 50 fund to get exposure to India’s top 100 listed companies.

Who should invest in large-cap Mutual Funds?

One should only start investment in large-cap mutual funds if the goal is at least five years away. “Even while investing in large-cap funds, the market may undergo up-and-down cycles. Investors must stay patient with their chosen index fund to let the compounding have its full effect,” mentioned Kulkarni. 

Disclaimer: The views and proposals made above are these of particular person analysts, and never of Mint. We advise traders to test with licensed specialists earlier than making any funding selections.

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Updated: 01 Sep 2023, 12:14 PM IST

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