ITI Large Cap Fund NFO – Should you invest?
ITI Large Cap Fund NFO – Should you invest?
ITI Large Cap Fund NFO would open for subscription on 4th December, 2020. Midcap and small cap mutual funds are high risk. One of the best ways to invest in mutual funds is, investing in large cap funds. Large cap funds in simple terms invest in large Cap stocks. These funds provide stable returns in the medium to long term. Since stock markets are taking correction, experts believe that investing in large cap funds could be the best bet now. To encash this opportunity, ITI Mutual Funds have come up with the ITI Large Cap Fund. In this article, we would provide ITI Large Cap Fund NFO issue details and whether we can invest in this fund or not.
What are Large Cap Mutual Funds?
As the name indicates, the large cap mutual fund invests in large cap stocks in India. A large cap company is generally defined as trustworthy, reputable and strong. These are generally well-established and has a strong track record.
ITI Large Cap Fund NFO Issue Details
This fund was originally supposed to open in Mar-2020, but due to lockdown, this got postponed till now. We have earlier written article on this subject in Mar-2020 which is updated now in Nov-2020.
This is an open-ended equity mutual fund scheme.
This scheme would open for subscription on 2nd December, 2020
This scheme would close for subscription on 18th December, 2020
Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of MF units after the NFO period.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 500 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 6 months.
The NAV of the NFO is Rs 10 per unit now during initial subscription.
There is no entry load to invest in this mutual fund scheme.
There is no exit load in this scheme.
This scheme is classified as moderately high risk mutual fund scheme.
Scheme total expense ratio (TER) is estimated at a maximum of 2.25% of the total assets on any day.
Who can invest in this mutual fund scheme?
Any of the following can invest in this scheme.
1) Resident Individuals
2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,
4) Foreign Portfolio Investors
Who is the Fund Manager of ITI Large Cap Fund NFO?
All funds will be managed in a co-fund manager model. Co-managed by Mr. George Heber Joseph & Mr. Pradeep Gokhale. Further, Mr. Pradeep Gokhale is the dedicated Fund Manager for making overseas investments as permitted under the Regulations, guidelines and circulars issued from time to time.
What is the benchmark for this scheme?
The benchmark for this scheme is Nifty 100 TRI.
What is the investment objective and strategy of this ITI Large Cap Fund NFO?
The investment objective of the Scheme is to seek to generate long term capital appreciation by predominantly investing in equity and equity related securities of large cap stocks.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
1) It invests 80% to 100% in equity and equity related Instruments of large cap companies. The risk profile in this segment is high.
2) It invests 0% to 20% in equity and equity related Instruments of other than large cap companies. The risk profile in this segment is high.
3) It would invest 0% to 20% in debt and money market instruments. The risk profile in this segment is low to medium.
4) It would invest 0% to 10% in units issued by REITs and InvITs. The risk profile in this segment is low to high.
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.
Why should you invest in such Large Cap Funds?
Here are a few reasons to invest in such schemes.
1) Largecap mutual funds invests in large cap stocks which are stable. Since these are large in size, these are safer companies compared to midcap and smallcap companies.
2) These are safer during downturns as such companies are established with sound fundamentals. You are seeing a stock market correction now. These funds that invest in large cap stocks would tend to recover faster during the recovery phase in the stock market.
3) Large cap stocks pay dividend too. This could provide dividend yield to your large cap fund’s portfolio.
Some risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) This scheme invests in only large cap stocks up to 100% which provide stable returns. You can’t expect to double or triple your money in the short to medium term even during the bull phase.
2) It would invest up to 20% in debt instruments. These days debt instruments of corporates have become high risk. Yes Bank debt paper value has been made to zero value as an example.
2) Investors should not assume any guaranteed returns from such funds.
3) Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.
4) Read carefully about all risk factors indicated in the scheme related documents.
How is the Performance of existing Large Cap Funds?
Let us see how some of the existing large cap funds*.
|Fund Name||6 Mth Ret (%)||1 Yr Ret (%)||3 Yr Ret (%)||5 Yr Ret (%)|
|Axis Bluechip Fund||35.9%||15.3%||14.6%||15.1%|
|Canara Robeco Bluechip Equity Fund||38.5%||19.3%||13.3%||14.6%|
|Mirae Asset Large Cap Fund||45.2%||10.3%||8.1%||13.9%|
|Motilal Oswal Focused 25 Fund||40.0%||15.9%||10.1%||12.9%|
|JM Core 11 Fund||39.2%||1.4%||3.4%||12.4%|
|HSBC Large Cap Equity Fund||41.7%||10.8%||7.9%||12.3%|
|Edelweiss Large Cap Fund||43.4%||13.0%||9.6%||12.3%|
|IDFC Large Cap Fund||36.7%||12.5%||7.0%||12.1%|
|IDFC Nifty Fund||45.2%||11.0%||9.2%||11.9%|
|Sundaram Select Focus Fund||32.6%||6.6%||8.4%||11.8%|
*Updated on 25-Nov-2020
Should you invest in the ITI Large Cap Fund NFO?
This mutual fund scheme invests in large cap stocks. However, since this is a relatively new fund, one cannot assess how such funds would perform in the medium to long term. If you want to test such new funds, you can invest. Otherwise, you can invest in some of the top large cap mutual fund schemes which we recommended earlier.
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ITI Large Cap Fund NFO Review
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