Must-have for your Mutual Fund Portfolio:

LARGE-CAP SCHEMES!
When an array of Equity Funds spoil you by choice,
trust Large-Cap Funds.

EXPERTSPEAK
want to invest ` 10,000 every
month in Equity Mutual Funds
(MFs). But there are so many
different types of Equity MFs.
How do I choose the right one?

V K SUDHARSAN
PROPRIETOR
VEEKAYS ENTERPRISES

HERES WHAT THE EXPERT SAID

WHAT ARE
LARGE-CAP FUNDS?

These are Equity Funds investing your

money in Stocks of large companies that
are stable and established.

HOW DO THEY DIFFER

FROM OTHER EQUITY
FUNDS?

Equity Funds, by default invest in

Stocks. However, there are different
types of Stocks. Usually, a particular
Equity Scheme invests only in one type
of Stocks. In the case of Large-Cap
Schemes, the Fund only invests in the
Stocks of companies that are worth
over ` 10,000 crore.

WHY ARE LARGE-CAP

FUNDS A MUST-HAVE?

As an investor, especially a new one,

you are always looking to minimise
risks. Entering the Equity market may be
worrisome. So, you may want to invest in
companies that have the least risk.
This means, investing in large,
established companies with a solid
growth record and stable future.
Thats what Large-Cap Funds do.

` 10,000

WHO SHOULD INVEST IN

LARGE-CAP FUNDS?

INVESTED 15 YEARS
AGO IS WORTH:

Investors who can afford to take on

some risk can invest in Equity.
And every Equity-friendly investor can,
and should, invest in Large-Cap Funds.
In fact, its recommended that you have
diversied Equity portfolio of Large-Cap
Funds, Mid-Cap & Small-Cap Funds, and
even Sectoral Funds.

WHY DO LARGE-CAP
FUNDS HAVE LOWER
RISK?

Large companies are usually stable.

They do not see bouts of volatile
earnings. They are often well-shielded
from economic problems. If not, they have
the capacity to withstand Stocks. And
Stock prices usually mimic the companys
protability. So, such Stocks are less
volatile than Stocks of smaller
companies. As a result, they tend
to give stable returns with lower risks.

WHY ARE LARGE-CAP

FUNDS RECOMMENDED
FOR BEGINNERS?

If you are just starting to invest in Equity,

then Large-Cap Funds are great to begin
with. This is because these Schemes
invest in brands and companies that
you are likely to have heard about.
This makes it easier for you to understand
the business and your investment.

ASSET CLASS

HOW DO LARGE-CAP
FUNDS SCORE VERSUS
OTHER ASSETS?

Theres another reason why LargeCap Funds are a must-have-they

usually give better returns than other
asset classes and even the benchmark. Heres a look:

KEY TAKEAWAYS

Large-Cap Funds
invest in the Stocks of
big, stable companies.

They tend to have a

lower risk than regular
Equity Funds.

They are a good

way to begin
investing in Equity.

WHAT NEXT?
Yes, it is important that you include Large-Cap Funds in your portfolio. But before you do that, it is important that you keep
certain rules and guidelines in mind.
For more details about seeking nancial advice, head to our website: www.beswatantra.com

KEEP THESE THINGS IN MIND WHILE

INVESTING IN LARGE-CAP FUNDS

Understand if you have the

capacity to invest in Equity.
Only then should you proceed.

Start investing in small

amounts through a Systematic
Investment Plan (SIP). This will give
you enough time to test the water
before jumping in.

Once you have started investing

in Large-Cap Funds, expand
your horizon. Slowly start investing
in other forms of Equity Funds.

Ensure the Fund has the

right benchmark. It is likely to
be the BSE Sensex, the NSE Nifty
or a broader benchmark like
the BSE 100.

The longer you remain invested,

the better are your returns likely
to be. That is the rule of the Equity
market-it gives better returns over
a longer tenure.

Stable companies usually give

higher dividends. Try to reinvest
these. This helps compound your
returns and increasing the value of
your portfolio.

Remember that there will be

periods when Mid-Cap and
Small-Cap Funds may outperform
Large-Cap Funds. This is because
lower volatility also means lower
returns.

*This content was created exclusively for UTI Swatantra

Had you invested

` 10 lakh in October
1986 in a Large-Cap
Fund, it would be worth
around ` 7 crore today.
Had you invested in PPF or Bank Fixed Deposit,
it would only be worth ` 1.77 crore or ` 1.21 crore
respectively. Gold would have helped you grow your
money to ` 1.62 crore.

DID YOU

KN W

Bank Fixed Deposit

` 29,115

7.4%

` 10,398

0.3%

Real Estate

` 56,000

12.2%

` 20,000

4.7%
5.5%

` 64,253

13%

` 22,304

S&P BSE 100

` 1,16,436

17.8%

` 41,584

10%

Large-Cap Fund

` 1,38,334

19.1%

` 49,405

11.25%

Gold

THEY SAID IT:

What they said
The single greatest edge an investor can have is a long-term orientation.
Seth Klarman

WHAT IT MEANS:
Many people think short-term. They jump the panic button on short
notices. Selling investments when the market falls is one of the biggest
mistakes. An investor can get some of the best returns if he or she
invests for the long-term.

There are surgical strikes everywhere--on the border, against black money and counterfeit notes. We want you to conduct surgical strikes
with respect to your nancial woes. So in the next edition, we will discuss how your nancial war strategy should look like.
For more details, follow us on Twitter #swatantra; Email queries or suggestions: info@beswatantra.com.
Please mention Swatantra in HBL in subject line.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

VALUE AVERAGE INFLATION- INFLATIONYEARLY ADJUSTED ADJUSTED

RETURN
VALUE
RETURN

*Investment made on October 1, 2001 and end values as of September 30, 2016.

*This content was created exclusively for UTI Swatantra

Investing in Equity is
riskier than investing
in Fixed Deposits,
Government Bonds,
or Postal Schemes.
Investing in Equity is
simple if you invest
through MF Schemes.
MFs have a rigorous
Stock-selection process.
This is quick and saves
you from poor Stock
selection. Large-Cap
Schemes are better than
Mid- and Small-Cap
Schemes for rst-time
investors.
Large-Cap Equity Funds
are comparatively safe
and predictable. They
are also less volatile
than Diversied Equity
Funds. Invest through
a Systematic Investment
Plan (SIP) to build a
big corpus over a long
period. An SIP helps
you to save for targeted
goals. This may include
a childs education or
your post-retirement
needs.
Large-Cap Funds mirror
the performance of the
economy. They can

weather the market

cycles. These Funds
generally comprise
giant Stocks that nd
representation in the
Sensex and Nifty.
Because of their large
size and scale, the
growth rates may not be
high during a turnaround
in the economy. But
they can provide steady
returns in the long run.
The SIP performance
of Large-Cap Funds
with more than ve
years in operation has
been good consistently.
A few such schemes
have delivered returns
higher than 12% over
ve years, 14% over 10
years, and 21% over 20
years. During the same
period, the Sensex
delivered returns of
12%, 8.6%, and 12.5%,
respectively.
Large-Cap Funds have a
lower expense ratio than
most Diversied Midand Small-Cap Funds.
So, investment in LargeCap Funds is ideal for
a new investor.