Suitability of Large Cap Mutual Funds

Suitability of Large Cap Funds

Suitability refers to the quality of the fund to be right or accurate for the investor as per the requirements. Prior to investing in large cap mutual funds, it is quite essential to understand the risk and returns associated with them and compare the same with your expectations to match the investment objectives and risk tolerance for evaluating whether it suits you or not.

Suitability As Per the Risk-Bearing Capacity

The large cap funds are less volatile in nature and provide stable returns among the various categories of the equity mutual funds. Accordingly, they are best suited to the investors having a low risk-bearing capacity. These funds understand the short-term fluctuations of the equity market and expect modest growth with stable performance even when the market shows high fluctuations.

Suitability As Per Investment Objective

The large cap funds are suitable for the investors who are looking for a well-balanced winning portfolio with a wide diversification to mitigate the risk factors, and have a strong belief on large-sized companies and their performances. Furthermore, it is the best fund for the investors who are beginners in the industry and want to get exposure to the equity market for long-term growth without bearing high market volatility and risk. As the allocation of the assets in the large-cap funds are well-diversified to maintain a balance between risk and returns, the portfolio of large-cap funds brings good capital growth and financial stability.

Suitability As Per the Investment Tenure

As the investments of large-cap funds are made in the equity stocks and shares of companies, they are best suited to the investors having medium to long-term tenure and want to attain capital appreciation. The reason being is that equity securities tend to generate returns over a particular period of time.

Conclusion

As per the various suitability parameters, this can be concluded here that the large cap funds are suitable for the investors with the following traits:

1. The first-time investors who want to explore equity investments to earn growth with minimum risk.
2. The investors who can stay invested for a period ranging from medium- to long-term.
3. The investors who have the primary objective to earn steady returns at a low-risk appetite.