Investor Education
Large Cap Index Fund
Large Cap Index funds, like small-cap index funds, are passively managed, low-cost index funds that replicate the performance of the underlying index. The only difference is large-cap index mutual funds track large-cap market indexes such as SENSEX, NIFTY 50, NIFTY Next 50, NIFTY 100, etc. Let’s delve deep into various aspects of large-cap index funds.
What is a Large Cap Index Mutual Fund?
Large-cap index funds are a type of passively managed mutual funds that invest the major portion of their corpus in shares of companies with large market capitalization. Passively managed funds are mutual funds in which the fund manager plays a negligible role in market research and fund selection. This type of index funds track and mirror the underlying index. Consequently, large index funds deliver the same return and involve the same risk represented by the index it tracks.
Advantages of Large Cap Index Funds
Large-cap index funds offer several benefits listed below:
- Large-cap index fund is pegged to the index constituents, which makes its portfolio mix way simpler and also a lot more predictable.
- Because of less market research and less interference on the part of the fund manager, investing in large-cap index funds carries low costs.
- Large-cap index funds tend to deliver higher returns over a longer period of time. Investors need to demonstrate patience to hold on.
- The risk associated with investment in index funds is finite and transparent. The Nifty and Sensex are well-known indices and hence it's easier to analyze them from a broader perspective using historical data.
- Index funds give investors exposure to the top 100 stocks.
- The process of investing in these funds is automated and regulation-based. This eliminates the human bias in the stock selection.
Note:
- Mutual fund investment is subject to market risk. Please read all related documents carefully before investing.
- Returns presenting past performance is no guarantee of future results.
Top 10 Schemes of Large Cap Index Mutual Funds India Sorted by Last 5-year Returns
Listed below are the top 20 large-cap index mutual funds:
Video: https://www.youtube.com/embed/LJMqFbeyJU0?si=1iIb2oSb1Zsx8mRQ
How to invest in Large Cap Index Funds?
You can invest in large capital funds online as well as offline. For example, you can invest in large-cap index funds in India online through one of the best mutual fund apps, like the ZFunds app. Install the ZFunds mutual fund app from the Google Play Store and follow the steps mentioned below to invest in large-cap index mutual funds online.
- Download the ZFunds app and complete your KYC by uploading any of your ID proofs issued by the central or state government, including an Aadhar card, PAN card, Voter ID card, driving license, passport, etc. Investors also need to upload their address proof to complete the KYC process.
- Log in through your personal credentials.
- Search for the best large-cap index mutual fund to invest in for long for long terms depending on your investment goals and risk tolerance.
- You can choose between SIP and lumpsum to invest in index funds. If you choose to invest through a lump sum, you will have to pay the entire amount at once. Otherwise, you can make your first investment through a SIP plan, like half-yearly, monthly, or daily SIP as per your investment objective.
After the successful investment, the units will be allotted and the investment will be reflected in 2-3 working days in your ZFunds account.
In index funds, fund managers don’t actively conduct market research and select stocks to be part of your portfolio. The objective of this investment strategy is to match the returns of a specific market index. Large-cap index mutual funds have a history of outperforming active funds. Index funds can be better options for new investors who have just started exploring mutual fund investments.
FAQs
1. Which are the best Large Cap Index Mutual Funds to invest in for long term in 2024?
Based on the performance of the last five years, you can choose from the large cap funds listed below to invest in for long term in India in 2024:
- DSP Nifty 50 Equal Weight Index Fund
- Sundaram Nifty 100 Equal Weight Fund
- Bandhan Nifty 50 Index Fund
- UTI Nifty 50 Index Fund
- ICICI Prudential Nifty 50 Index Fund
- Tata Nifty 50 Index Fund
- Nippon India Index Nifty 50
- HDFC Index Fund Nifty 50 Plan
- SBI Nifty Index Fund
- Nippon India Index S&P BSE Sensex
Note: Index funds replicate the performance of a particular market index and returns presenting past performance is no guarantee of future results.
2. Is it good to invest in large -cap index?Large cap index funds can generate higher returns over a longer time provided you have the patience to hold on with discipline. Here are the benefits of investing in large-cap index mutual funds in India:
- Higher growth potential
- Low cost due to passive investment method
- Negligible human interference ensures no subjective decision-making in the stock selection
3. Are Large-cap index funds risky?Investments of all sorts involve some amount of risk. As compared to small cap funds, large-cap index funds are less risky. However, they offer greater returns if you stay invested for a longer time. The risk involved in large cap index funds depends on the underlying index.
4. What is the Nifty large cap 250 index fund?Nifty large-cap 250 index fund is an open-ended investment scheme that mirrors Nifty large-mid cap 250 index. The scheme allows investors to invest in shares of the top 100 large cap and 150 mid cap companies without much market research.
5. Which is better large cap or small index fund?It depends on your risk tolerance and investment goals. While large cap index funds are less risky than small cap index funds, small cap funds can deliver higher returns than large-cap funds. Conservative investors can invest in large cap funds and aggressive investors can choose small cap index funds. Alternatively, investors can diversify their portfolios by investing in both funds.