It’s raining returns in mutual funds!!! Are you still investing in other investment avenues like fixed deposits (FD), recurring deposits (RD), and traditional insurance products? If so, then why not invest in mutual funds?
Have you heard of the term Large Cap Equity Mutual Funds? What does the term signify? Why should we be investing in it? Which are the best large cap equity mutual funds for F.Y.2014-2015?
If you want to create wealth in the long term, the best way is to invest in equity mutual funds. There are various types of equity mutual funds like Large Cap, Mid Cap, Small Cap, Micro Cap etc. Additionally, there are multiple ways of investing money in mutual funds which includes onetime lump sum investment or investments at regular intervals which includes your Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs).For a first time investor, the best way is to invest through SIPs.
Definition of Large Cap Equity Mutual Funds
Mutual funds which invest a larger proportion of their money in companies with huge market capitalization, or let us say large blue chip companies, are called large cap funds.
What is market capitalization?
Market Capitalization = Number of Outstanding Shares*Current Price per Share
Why should someone invest in Equity Mutual Funds?
Equity mutual funds provide benefits such as diversification, expert management, liquidity, lower costs, etc.
The two reasons which you cannot ignore include –
- Beating Inflation
- Better Returns
When inflation year on year is 8%-10%, how can your FDs, RDs, and PPF investments beat that inflation? And who says inflation is only 8%-10%? Take example of the Healthcare sector where inflation figures are much higher than this?
So until you earn a return which is better than your inflation figures, how can you be wealthy?
Good equity mutual funds are giving returns of 15%-20% for last few years. In the last 6-9 months, returns are in the range of 20%-40%.
Top/Best 5 Large Cap Equity Mutual Funds for 2014-2015
Large cap equity mutual funds may give you fewer returns than small cap and mid cap but they are less volatile than small cap and mid cap mutual funds.
It is not certain that these funds will perform the same way in the future, so it is necessary to review your large cap equity mutual funds once in a year.