Large cap funds are those mutual funds which invest the greater proportion of their corpus in stocks of companies who have a large market capitalization. Market capitalization is the product of the number of shares outstanding and the market price of the share
Mutual funds invest the amount they have generated from the public in stocks as per the investment objective of that fund. For large cap funds, the investment objective is to invest mostly in stocks of large companies.
Large Cap Funds are Stable
Such funds are mostly stable as such companies have survived the start up stage and are comparatively stable. They are suited for people who want to have an exposure to the capital market but have limited risk appetite.
Since the performance of the stocks are relatively stable, one may not expect a very high percentage of return from such funds. They tend to offer some income and also retain the principal amount of the investors. Their performance are at times surpassed by the small and mid cap funds but those funds tend to fluctuate more often.
Large cap funds provide a good yield in the long term and the performance is generally stable not largely affected by modernization, expansion, changes in fiscal policies, monetary policies, etc.