You may have heard about Mutual Funds and Small cap, mid cap and large cap funds. Have you ever wondered what Large Cap Funds are?
What is a Large Cap Fund?
A Large Cap Fund is basically a company with a large market capitalization value, as its name suggests. Certified Financial Planner Kuber Mindz explains that Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share and that a company’s stock is generally classified as large cap, mid cap or small cap.
Who and when should we invest in large cap funds?
Though this entirely depends on your budget and financial goals (with time frame being the most important), one can say that large cap funds are suitable for short term goals. This is because they carry lesser risk than small cap funds. Best Financial Advisor Kuber Mindz says that large cap funds have huge capitalization.
Features of Large cap funds
Large cap funds offer liquidity. You can buy and sell shares money at convenience. Isn’t that great?
- Large cap funds are more known
Large cap funds are more known compared to small cap funds. This makes sure you know which company you are investing in, etc.
- Available data
Investors can get access to adequate data about the company they are investing in. This helps them judge which company they must finally invest in.
- Performance gives hint about economy
That’s right! The economic situation is represented by the performance of large cap funds. These companies are rarely affected by volatility.
Merits of Large Cap funds
Large cap funds offer a lot of stability to investment portfolio. That’s why they are safer than mid cap and small cap funds.
Investors receive steady dividend payments! This means good income.
- Long business tenure
Investors and creditors are in a position to obtain research on company operations and profitability levels with ease.
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