The new category – Large and Mid Cap Fund is introduced by SEBI in order to offer a broad choice amongst investors and to simplify scheme selection that best suits their risk profile. As per the revised norms, Large cap funds will invest at least 80 percent of its total assets in the top 100 listed stocks by market capitalisation. On the other hand, mid-cap funds will invest at least 65 percent of its total assets in companies ranked between 101st to the 250th company in terms of full market capitalisation.
The new Large and Mid Cap Funds will be mandated to hold a minimum of 35 percent each in mid and large cap stock, that is, 35 percent of the corpus will be invested in large-cap companies while another 35 percent will have to be deployed in mid-cap companies. Ideally, this fund is suitable for investors who have a high-risk appetite and is seeking to invest for a long-term.
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Basically wealth is an abundance of variable material resources. The meaning of wealth is not straightforward. Wealth is basically a person’s net worth. Wealth can be explained as assets minus liabilities
What is Management?
Management is the art of getting the work accomplished by the efforts of other persons and factors. Management involves Planning, Organizing, Staffing, Controlling, Directing an organization.
What is Wealth Management?
Wealth Management is a discipline that incorporates financial planning, Investment portfolio management and a number of financial services. It is a professional service it can also encompass all parts of a person’s financial life. Wealth management is done by wealth managers. Wealth managers can be MBAs, CFAs & Certified Financial Planners(CFPCM) or any credentialed professional money manager who works to enhance the growth and income. Investors must have already accumulated a proper amount of wealth for wealth management strategies to be efficient and effective. It can be provided by large company entities, independent financial advisers or multi-licensed portfolio managers. Their services are designed to focus on high-net worth customers. Wealth Managers use their experience in estate planning, risk management and legal specialists, to manage the holdings of high net worth client. Wealth managers must contain a current profile of client holdings.
Wealth management is an integrated process for helping clients manage their wealth. It involves huge a wide range of services and the services depend upon each investor but the condition is that services should include investment management, financial planning, retirement, Estate planning, tax planning, debt management and cash flow.
Features of Wealth Management:
Allows customer to review risk profiles.
Track holdings against model portfolios fro returns.
Captures Customer’s details and risk profile.
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Based on the advanced algorithms they provide tax coverage, education and insurance.
Interfaces with banks, portfolios management systems, price vendors and other agencies.
If you are a new investor or you do not have a very high risk appetite and a longer investment horizon (minimum of seven to 10 years), it is better to stay away from small cap mutual fund schemes. Small cap mutual fund schemes are meant for aggressive equity investors who can stomach a lot of volatility and risk.
Multi-cap funds are diversified equity funds that invest in varying proportions in stocks of companies across market capitalization to optimize return on investment.
Best multi-cap mutual funds invest in equity shares of companies of different market capitalisation. Instead of sticking to a particular capitalisation, these funds incorporate large-cap, mid-cap, and small-cap stocks in the portfolio in a specific proportion. As compared to pure mid-cap/small-cap funds, these funds are less risky and prevalent among investors who are less aggressive in terms of returns.
The fund manager is well-positioned to pick stocks across capitalisation and sectors as per his outlook of the market. The investor, thus, may stay free from anxieties regarding chasing the action or missing out on rallies in a particular sphere of the market.
Apart from stock-picking, the fund manager keeps switching holdings in the fund between large-cap, mid-, and small-cap stocks as he/she deems fit, based on market movements. Using the leeway, the fund managers tend to have a large-cap bias and keep on increasing or decreasing their mid-cap holdings by a small margin as and when market conditions change.
Since these funds are invested in multi-cap companies, during a bull run, they deliver stupendous returns, sometimes even outperforming the pure large/mid-cap funds. This happens because, during a bull market, the underlying stocks in the funds are able to unlock their values and tap into the growth opportunities.
2. Who Should Invest in Best Multi-Cap Mutual Funds?
Multi-cap funds sustain an extensively diversified portfolio consisting of stocks of different market capitalisation and sectors. These funds are an excellent way to take exposure to broader equity segment using systematic investment plan (SIP) of as low as Rs 500 to start-off.
Investors who don’t want to get into the trouble of stock-picking or deciding which market capitalisation fund would suit them may go for multi-cap funds as a starter. They may switch to pure cap funds after getting the hang of markets. They are also suited for beginners and novice investors who intend to hedge their risks.
From a risk-return perspective, best multi-cap funds are capable of balancing the risk and volatility very well when it comes to blending the small caps and mid-caps in a single portfolio. At the same time, the investor may expect the stability that they would receive from a large-cap fund. During the market rally, small-caps perform well, and when it is a slump, the well-established companies tend to take hold of erosion of returns. Those who have a moderate risk appetite may think of investing in multi-cap funds.
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Mid-cap mutual funds aim at generating returns which beat the benchmark when the markets play well. They are much riskier than large-cap mutual funds due to high volatility.
Mid-cap mutual funds, as the names suggest, invest in stocks of the mid-sized companies or stocks with medium market capitalisations. In this context, the word ‘cap’ refers to the market capitalisation or size of the listed company. For mid-cap, the market capitalisation ranges between Rs 500 crore to Rs 10,000 crore. A company’s size is an essential criterion while selecting equity portfolios because depending on the size of the company, the portfolio would have its unique set of opportunities and risks.
Since these funds are invested in mid-cap companies, during a bull run, they deliver stupendous returns, sometimes even outperforming large-cap funds or diversified equity funds. This happens because, during a bull market, the underlying stocks in the funds are able to unlock their values and tap into the growth opportunities.
2. Who Should Invest in Mid-Cap Mutual Funds?
Investors who are looking for faster growth and have an appetite for a high-risk can invest in mid-cap funds. Mid-sized companies provide faster earnings and steep growth while being volatile on the stock index. Investors who are ready to face volatility of these stocks in expectations of fascinating returns can invest in these funds.
3. Advantages of Mid-Cap Mutual Funds
Mid-cap funds have generally outperformed large-cap funds. The very nature of the mid-cap funds makes the trend to continue for quite some time.
The mid-cap funds are relatively underfollowed in stock markets as compared to large-cap funds. This provides investors with an excellent opportunity to seek fast growth in their investments using these funds.
4. Things an Investor Should Consider
Though mid-cap funds perform very well in bull runs, their value takes quite a beating when the market sentiment is dropping. Also, in the case of high-quality stocks, mid-cap funds are not appropriate since they have a higher risk factor involved. Mid-cap stocks suffer from liquidity constraints due to their smaller capital base i.e. the number of shares offered by the company.
Since the underlying shares are characterised by lower market capitalisation and limited liquidity, these funds tend to follow cycles of boom and dip. This is based on the mirroring of the stock indices in general. The performance of mid-cap funds is mentioned below for the year 2017.
Large-cap mutual funds are those that invest predominantly in companies having a large market capitalisation. These are popular for their consistent returns over some time. The companies of large-cap funds are generally leaders in their field of business and hence, tend to remain more stable than smaller or mid-cap companies at times when markets are volatile. The large-cap companies generally have a good track record in the market backed by healthy corporate governance practices.
2. Who Should Invest in Best Large-Cap Mutual Funds?
Individuals make investments based on their requirements, goals, and risk profile. The large-cap mutual funds are apt for those who want to earn higher returns with little to no risk of market fluctuations. These funds are suitable for those investors who are less aggressive in their investment strategy and don’t wish to invest in risky mid-cap and small-cap mutual funds mutual funds.
Investing in large-cap mutual funds is a good option for the first-time investor. The underlying companies have a history of consistent performance during the highs and lows of the market. Investors must understand that these funds may not pose very high returns even at the hour of favourable market conditions. But keep in mind that the returns from large-cap funds will be less volatile.
Top 10 Best Large-Cap Mutual Funds
Based on large-cap fund performance indicator values, following are the best large-cap mutual funds. The rankings done here are for a consolidated list of large-cap equity funds on a 3-year return basis.
Top large-cap funds
5-year returns
Axis Bluechip Fund – GrowthLarge-Cap Fund
12.31%
Mirae Asset Large Cap Fund – Regular – GrowthLarge-Cap Fund
11.90%
Reliance Large Cap Fund – GrowthLarge-Cap Fund
10.77%
HDFC Top 100 Fund – GrowthLarge-Cap Fund
10.61%
ICICI Prudential Bluechip Fund – Institutional Option I – GrowthLarge-Cap Fund
10.42%
Mutual funds are subject to market risk and require informed decision making. Reach out to our team of financial experts at Mob- 9891423442 to gain further guidance on investing. More visit to agindiaonline.com https://youtube.com/c/Aginvestment
