We understood what large cap stocks are. To recapitulate they are stocks who are industry leaders with a very high market capitalization.
As a thumb rule stocks with a market capitalization of more than Rs.1000 crores or 10 billion rupees is considered a Large Cap stock.
Top 100 large Cap stocks can be represented by the index Nifty 500. You can check it out.
But what is a Large Cap Mutual fund?
The Securities Exchange and Board of India or (SEBI) who is the regulator for mutual funds has defined a Large Cap mutual fund. To see the circular …
Large Cap funds are equity mutual funds where the fund manager has to invest in stocks 1st -100th company in terms of market capitalization.
Let’s take an example of Axis Large Cap fund named Axis Blue-chip fund. It has Assets under management of 11000 crs.
Assets Under management means the total value of money that investors have handed over in this particular scheme, ie Axis BlueChip fund.
So this money the fund manager has to manage in the scheme by investing in stocks and generate a good return for the investors.
SEBI has defined by the above circular what the fund manager can do and cannot do in this fund. This is to protect the investor and making sure that the fund manager is managing the funds as per the desire of the investor.
So first of all the fund manager has to always have 65% of the assets in stocks. Which means at any given time 65% of the above has to be in stocks.
He can invest more than 65% but not less than 65% in stocks.
The stocks which he can invest have to LARGE CAPS. As it is a large Cap fund.
The universe of large cap funds is huge but Sebi Says that they have to invest in the top 100 companies of India via Market Capitalisation.
So they can invest in any company which is a part of Nifty 100.
They can choose which one and how much to invest based on their internal mandate and own research and conviction.
The performance of large cap funds varies a lot because of the fund manager skill and of course some luck. J
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