EXPERT LARGE-CAP SCHEMES! - UTI Swatantra · They do not see bouts of volatile earnings. They are...
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For more details about seeking financial advice, head to our website: www.beswatantra.com Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 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 financial woes. So in the next edition, we will discuss how your financial war strategy should look like. For more details, follow us on Twitter #swatantra; Email queries or suggestions: [email protected]. Please mention ‘Swatantra in HBL ’ in subject line. 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. That’s what Large-Cap Funds do. 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 company’s profitability. So, such Stocks are less volatile than Stocks of smaller companies. As a result, they tend to give stable returns with lower risks. WHO SHOULD INVEST IN LARGE-CAP FUNDS? 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, it’s recommended that you have diversified Equity portfolio of Large-Cap Funds, Mid-Cap & Small-Cap Funds, and even Sectoral Funds. 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. 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. Must-have for your Mutual Fund Portfolio: LARGE-CAP SCHEMES! When an array of Equity Funds spoil you by choice, trust Large-Cap Funds. ` 10,000 INVESTED 15 YEARS AGO IS WORTH: ASSET CLASS VALUE AVERAGE INFLATION- INFLATION- YEARLY ADJUSTED ADJUSTED RETURN VALUE RETURN Bank Fixed Deposit ` 29,115 7.4% ` 10,398 0.3% Real Estate ` 56,000 12.2% ` 20,000 4.7% Gold ` 64,253 13% ` 22,304 5.5% S&P BSE 100 ` 1,16,436 17.8% ` 41,584 10% Large-Cap Fund ` 1,38,334 19.1% ` 49,405 11.25% *Investment made on October 1, 2001 and end values as of September 30, 2016. KEEP THESE THINGS IN MIND WHILE INVESTING IN LARGE-CAP FUNDS 1 Understand if you have the capacity to invest in Equity. Only then should you proceed. 2 Start investing in small amounts through a Systematic Investment Plan (SIP). This will give you enough time to test the water before jumping in. 3 Once you have started investing in Large-Cap Funds, expand your horizon. Slowly start investing in other forms of Equity Funds. 4 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. 5 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. 6 Stable companies usually give higher dividends. Try to reinvest these. This helps compound your returns and increasing the value of your portfolio. 7 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. DID YOU KN W 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. THEY SAID IT: What they said “The single greatest edge an investor can have is a long-term orientation.” – Seth Klarman 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. WHAT IT MEANS: KEY TAKEAWAYS Large-Cap Funds invest in the Stocks of big, stable companies. 1 2 They tend to have a lower risk than regular Equity Funds. 3 They are a good way to begin investing in Equity. HOW DO LARGE-CAP FUNDS SCORE VERSUS OTHER ASSETS? There’s another reason why Large- Cap Funds are a must-have-they usually give better returns than other asset classes and even the bench- mark. Here’s a look: EXPERTSPEAK 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 first-time investors. Large-Cap Equity Funds are comparatively safe and predictable. They are also less volatile than Diversified 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 child’s 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 find 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 five years in operation has been good consistently. A few such schemes have delivered returns higher than 12% over five 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 Diversified Mid- and Small-Cap Funds. So, investment in Large- Cap Funds is ideal for a new investor. HERE’S WHAT THE EXPERT SAID I 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 *This content was created exclusively for UTI Swatantra *This content was created exclusively for UTI Swatantra 1 2 3 4 5 6 7
Transcript of EXPERT LARGE-CAP SCHEMES! - UTI Swatantra · They do not see bouts of volatile earnings. They are...
For more details about seeking fi nancial advice, head to our website: www.beswatantra.com
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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 fi nancial woes. So in the next edition, we will discuss how your fi nancial war strategy should look like.
For more details, follow us on Twitter #swatantra; Email queries or suggestions: [email protected]. Please mention ‘Swatantra in HBL’ in subject line.
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. That’s what Large-Cap Funds do.
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 company’s profi tability. So, such Stocks are less volatile than Stocks of smaller companies. As a result, they tend to give stable returns with lower risks.
WHO SHOULD INVEST IN LARGE-CAP FUNDS?
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, it’s recommended that you have diversifi ed Equity portfolio of Large-Cap Funds, Mid-Cap & Small-Cap Funds, and even Sectoral Funds.
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.
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.
Must-have for your Mutual Fund Portfolio:
LARGE-CAP SCHEMES!When an array of Equity Funds spoil you by choice, trust Large-Cap Funds.
` 10,000 INVESTED 15 YEARS AGO IS WORTH:ASSET CLASS VALUE AVERAGE INFLATION- INFLATION- YEARLY ADJUSTED ADJUSTED RETURN VALUE RETURN
Bank Fixed Deposit ` 29,115 7.4% ` 10,398 0.3%
Real Estate ` 56,000 12.2% ` 20,000 4.7%
Gold ` 64,253 13% ` 22,304 5.5%
S&P BSE 100 ` 1,16,436 17.8% ` 41,584 10%
Large-Cap Fund ` 1,38,334 19.1% ` 49,405 11.25%
*Investment made on October 1, 2001 and end values as of September 30, 2016.
KEEP THESE THINGS IN MIND WHILE
INVESTING IN LARGE-CAP FUNDS
1 Understand if you have the capacity to invest in Equity.
Only then should you proceed.
2 Start investing in small amounts through a Systematic
Investment Plan (SIP). This will give you enough time to test the water before jumping in.
3 Once you have started investing in Large-Cap Funds, expand
your horizon. Slowly start investing in other forms of Equity Funds.
4 Ensure the Fund has the right benchmark. It is likely to
be the BSE Sensex, the NSE Nifty or a broader benchmark likethe BSE 100.
5 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 overa longer tenure.
6 Stable companies usually give higher dividends. Try to reinvest
these. This helps compound your returns and increasing the value of your portfolio.
7 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.
DID YOU KN W
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.
THEY SAID IT:What they said“The single greatest edge an investor can have is a long-term orientation.”
– Seth Klarman
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.
WHAT IT MEANS:
KEY TAKEAWAYS
Large-Cap Funds invest in the Stocks of big, stable companies.1 2
They tend to have a lower risk than regular Equity Funds. 3
They are a good way to begin investing in Equity.
HOW DO LARGE-CAP FUNDS SCORE VERSUS OTHER ASSETS?
There’s another reason why Large-Cap Funds are a must-have-they usually give better returns than other asset classes and even the bench-mark. Here’s a look:
EXPERT SPEAK
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 fi rst-time investors.Large-Cap Equity Funds are comparatively safe and predictable. They are also less volatile than Diversifi ed 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 child’s 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 fi 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 fi ve years in operation has been good consistently. A few such schemes have delivered returns higher than 12% over fi 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 Diversifi ed Mid- and Small-Cap Funds. So, investment in Large-Cap Funds is ideal for a new investor.
HERE’S WHAT THE EXPERT SAID
I 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
*This content was created exclusively for UTI Swatantra
*This content was created exclusively for UTI Swatantra
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