07 April 2015

Large Cap (Big Cap) Mutual Funds

There are a  very large number of mutual funds available in the market. Funds which invest a larger proportion of their corpus in companies with large market capitalization are called large cap funds.. Large cap is an abbreviation of the term "large market capitalization".

The criteria for large cap companies may vary. However, these are generally the ones with huge market capitalization. Large cap funds are known to offer stable and sustainable returns over a period of time, but might be outperformed by small and mid-cap funds, which have higher risk exposure.

One can look at the BSE-Sensex or BSE-100 Index as a reference point for large cap stocks. Market capitalisation for stocks in the BSE-100 Index, for instance, ranges from Rs. 200 bn to Rs. 3,500 bn.

These are stocks of usually large and well-established companies that have a strong market presence and are generally considered as safe investments. One important fact about large caps is that information regarding these companies is readily available in newspapers and magazines. Most of the large cap companies have good disclosures and therefore there is no dearth of information for an investor looking into them.

Large companies such as Infosys, TCS, and Wipro are classified as large cap stocks. These companies have been around in the industry long enough and have firmly established themselves as leading players. Their stocks are publicly traded and have large market capitalisations.