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Your large cap mutual funds are not same anymore

Stay away, say advisors
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Stay away, say advisors

Some mutual fund advisors are asking their clients to stop investing in large cap mutual funds, especially actively-managed schemes. These advisors believe that these schemes have lost their relevance after the re-categorisation exercise that mandated them to invest 80 per cent of the corpus in top 100 companies.

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Active vs passive funds
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Active vs passive funds

Many mutual fund advisors believe that index-based large cap schemes make more sense after the re-categorisation of mutual funds by Sebi. They say since large cap schemes have a mandate to invest 80 per cent of the corpus in top 100 stocks by market capitalisation, actively-managed schemes are unlikely to generate very high alpha (extra returns than the benchmark) anymore.

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Should you abandon large cap mutual funds?
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Should you abandon large cap mutual funds?

As you know, these schemes are going to invest heavily in mega caps or giant stocks that are least risky. That means these schemes are going to offer modest returns in the coming days. However, that doesn’t mean you should abandon them. If you are a conservative equity investor looking to invest for long-term financial goals, you may still choose large cap schemes.

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Tone down your return expectations
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Tone down your return expectations

Be realistic about how much these schemes may offer you in the coming years. Earlier, mutual fund managers and advisors used to say these schemes have the potential to offer 12 per cent returns over a long period. Now, they say investors may expect 10 per cent of these schemes.Here are our recommended schemesAxis Bluechip Fund
ICICI Prudential Bluechip Fund
Reliance Large Cap Fund
Canara Robeco Bluechip Equity
HDFC Top 100 FundBest large cap mutual funds to invest in 2019

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