Riding the Storm with Large Cap MFs

THERE is a growing school of thought in the market that large cap funds are a relatively safer haven to ride the ongoing selling storm at the Indian bourses.

- ASHOK KUMAR

The Securities and Exchange Board of India (SEBI) in October 2017, defined a Large cap fund as an open-ended equity-oriented mutual fund scheme that invests at least 80% of its under management (AUM) in large cap stocks. SEBI further defines a large-cap company as those listed companies which are ranked from 1st to 100th company in the Indian stock exchanges in the terms of market capitalization.

Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share. Every quarter, the Association of Mutual Funds in India (AMFI) publishes a list of the top 100 companies by market cap. Fund managers usually follow this list when making investments in large-cap stocks.