Skip to main content

Largecap Fund Returns

Invest Best Largecap Funds Online
 
 
 
 


Large-cap funds are supposed to add stability to your portfolio, but look out for signs of aggression.
 
Over the past few weeks, the Street has shifted its at tention to large cap stocks. If you have been riding the mid-cap wave for the past year, this would be the right time to introduce a large-cap fund into the mix. Irrespective of the market mood, it makes sense to have some allocation towards large-cap funds to stabilise the portfolio. Although picking one may seem easy compared to a mid-cap or multi-cap fund, experts advise investors to be discerning in their choice of large-cap funds. Here is why you need to think before you buy.

 

A large-cap fund's portfolio is typically drawn from a very narrow set of stocks, unlike other categories, which select from a much wider base. For instance, some largecap funds cherry pick stocks from the 50-share Nifty index or 30-share Sensex index, others from the BSE100 or Nifty100. A mid-cap fund, on the other hand, draws from a wider universe, such as Nifty Midcap or BSE200. Playing within this narrow window leaves little scope for funds in this category to have starkly varying portfolios. However, while the large-cap category may seem like a bunch of identical offerings compared to the multi-flavoured mid-cap funds basket, this is not at all the case. Look deeper, and you will find huge differences in the investing style, risk controls and flexibility in investment mandate. It may seem like all large-cap funds are sailing in the same boat, but there are differences in the approach of these funds.

Due to the inherent nature of its underlying stocks, a large-cap fund has limited ability to outperform the benchmark index, as compared to a mid-cap fund. However, fund managers try to generate alpha through various means. First, some large-cap funds enjoy higher flexibility in investments than others. Some seek to generate higher out performance over the benchmark and peers by taking higher exposure to mid-cap stocks as compared to others. Some funds enjoy more leeway to invest in nascent large-caps, which can make a big difference to the fund's return profile. There are very few pure-play large-cap offerings in this space. Many of these funds invest up to 15-20% in mid-caps as an avenue for generating higher alpha in the long run.

The funds that prefer to stick to the large cap mandate are the ones that contain downside well. Franklin India Bluechip Fund, for instance, is known to run a strict large-cap mandate. Others may exhibit higher volatility in returns, which may not suit the investor's risk profile.

Apart from this, some funds try to generate higher returns by taking larger active positions in certain stocks. An active position implies the extent to which the portfolio allocation to a single stock or sector varies from its weight in the scheme benchmark index. So, if a certain stock carries a 5% weight in the benchmark index, but the fund has invested 8% of the portfolio in the stock, it has an active weight of 3% in the stock. Typically, large-cap funds take smaller active positions compared to other fund categories, but this varies from fund to fund. By taking a more active position in select stocks, a fund manager can enhance the contribution of these stocks to the fund's overall returns and make the most of any rally in price. Fund performance is not only determined by stock selection but how the individual stocks are weighed within the portfo lio. This is why some large-cap funds managed to deliver positive returns over the past year, even as others struggled. A higher degree of concen tration in holdings may work wonders if pulled off well, but can also drag returns down if the calls go wrong. For instance, concentrated exposure to stocks like SBI and ICICI Bank has seen HDFC Top 200 slide down the performance charts for the past few years.

 

Even within the large-cap space, there are differences in fund traits that lend varying degrees of aggression to each portfolio. As a rule, a large-cap fund should carry less risk. The very purpose of large-cap funds is to contain volatility and lend some stability to the portfolio. The fund you pick should be in a position to do so. If you come across a large-cap scheme providing flashy return, stay away. Looking at the upcapture and downcapture ratio when choosing the fund. This ratio shows you whether a given fund has outperformed a broad market benchmark during periods of market strength and weakness, and if so, by how much. A quality large-cap fund will typically offer 90-100% of the market upside but capture much less of a market downside, thus delivering alpha over a market cycle. You should be cautious if the fund offers anything beyond this.

 
-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

Popular posts from this blog

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund Tata Mutual Fund has decided to merge Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund, with effect from January 16, 2015.   Investors of Tata Indo-Global Infrastructure Fund can redeem/ switch out units from December 13, 2014 to January 12, 2015 without paying any exit load. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund A...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now