How To Choose The Right Large Cap Mutual Fund In India?

Choosing the right large cap mutual fund in India is never easy. Some funds tend to perform well, while other funds tend to languish.

For example, in the last one year, the best performing large cap mutual fund has been the SBI Blue Chip Fund. The fund has a solid portfolio and continues to churn out impressive gains month on month.

Is choosing the right large cap mutual fund difficult?

Today, we have scores of data that are available on the fund houses on website, as well as websites owned by many companies who do extensive research. Hence, it is easy to pick and choose, though we wish to emphasize, that past track record is no indication of future performance.

Steps to choose the right large cap mutual fund

It is important to state that nobody in this world can guarantee you returns, from investments made in equity mutual funds. Hence, we are just giving you places where you can do adequate research and take your own call. Here they go.

1) Crisil mutual fund ranking

Crisil comes out with a large cap mutual fund rating, whereby it rates large cap mutual funds, based on many parameters.

At the moment the fund house has rated a number of large cap equity mutual funds, with the No 1 ranking. These include: Birla Sunlife Frontline Equity, Kotak Select Focus Fund, SBI Blue Chip Fund.

The rest of the large cap equity mutual funds are voted as no 2, 3, 4 and 5.

2) Value Research Online

Value Research Online also does its own research and comes up with ratings. Generally, 5-star ratings are considered as good by the research house. At the moment, Value Research Online has rated funds like Quantum Long Term Equity Fund and SBI Blue Chip Fund with a 5-star rating.

Again, these are rated by various parameters by seasoned professionals in the business. The ratings can undergo a change over a period of time, so keep a watch.

3) Do your own research

You can do your own research as well as there is plenty of information available. All of the fund houses provide you important data like returns generated over a period time, entry and exit load, expense ratio etc., which helps you to take an informed decision.

Conclusion

It's also important to remember while choosing the right large cap mutual fund in India, there is no assurance of returns. Much would depend on the portfolio of the mutual fund. Let us give an example. Let us say that you invested in a mutual fund in the early 2000s, which had a heavy holding in Satyam Computers.

We all know what happened in Satyam Computers and how the company went burst. If a fund manager had invested heavily, the mutual fund scheme would have lost money.

Hence, to a large extent it also depends on a host of factors and the fund managers face a grave risk, if companies are not honest and transparent. Having said that we wish to state that large cap equity funds have generated good returns in the past and there is no reason to believe, why they will not continue to do well.

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