In today’s market, there is a profusion of mutual funds to choose from. Large cap funds are funds that invest a bigger percentage of their assets in firms with a high market capitalization.
In difficult times, many investment experts advise investors to seek sanctuary in large caps or blue chips. Is it time to seek refuge in large-cap schemes as the market enters a tumultuous phase and faces numerous uncertainties?
Surprisingly, the majority of mutual fund participants are no longer discussing large-cap schemes. Some argue that there is still a case for huge cap schemes in theory. Others, on the other hand, recommend a Flexi cap or mid and small-cap designs. If an investor’s risk profile allows it, they can invest in them.
Investors should not place too much emphasis on the discussion, according to fund managers, who advise them to stick to their financial goals and invest according to their risk appetite.
The fund manager has the freedom to move between market capitalizations and take advantage of valuation differences between market capitalization segments “ICICI Prudential AMC’s ED and CIO, S Naren, stated.
Manufacturing, capital goods, financials, real estate, and exports are expected to lead the investment cycle, according to Chandraprakash Padiyar, Senior Fund Manager, Tata Mutual Fund. It denotes a broad-based economic rebound and improvement.
As you can see, even in these uncertain times, there is still a solid case for huge caps. The market is concerned because it has no hard information on rate hikes or money market liquidity if the government borrows excessively.
“The market is at a crossroads, with equities prices 1.2-1.5 standard deviations over their long-term average. In general, although not always, the blue-chip segment has a better level of stability “IIFL Wealth’s Senior Managing Partner and Head of Advisory, Himadri Chatterjee, stated.
Blue chips, according to Trideep Bhattacharya, CIO – Equities, Edelweiss Mutual Fund, are a suitable option for risk-averse investors. Aggressive investors, on the other hand, can opt for mid and small-cap funds.
“Consider the long term (10 years or more). Long-term wealth compounding is the ideal way to generate returns, have a suitable asset allocation among numerous possibilities based on each individual’s risk profile, and save for the long run “Padiyar opined.
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