Principal Large Cap Fund NFO – Should you invest?
What are Large Cap Mutual Funds?
As the name indicates, the large cap mutual fund invests in large cap stocks. A large cap company is generally defined as trustworthy, reputable and strong. These are generally well-established and has a strong track record.
Principal Large Cap Fund NFO Issue Details
This is an open-ended equity fund. Here are the NFO issue details.
|Scheme would reopen||20-Oct-20|
|Scheme Plans||1) Direct and Regular
2) Growth and Dividend
|Minimum investment (Lumpsump)||Rs 5,000|
|Minimum investment (SIP)||Rs 500 / 12 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||0 – Upto 25% of units
1% – > 24% of units if redeemed within 1 year
|Risk Classification||Moderate High|
|Max Total expense Ratio (TER)||2.25%|
Who can invest in this NFO?
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 Principal Large Cap Fund NFO?
Mr. Sudhir Kedia
Mr. Anirvan Sarkar – dedicated fund manager for foreign investments
What is the benchmark for this scheme?
The benchmark for this scheme is Nifty 100 TRI.
What is the investment objective of Principal Large Cap Fund?
To achieve long term capital appreciation by investing in a diversified portfolio predominantly consisting of equity and equity related securities of Large Cap companies including derivatives.
However, there can be no assurance that the investment objective of the Scheme will be achieved.
What is the allocation pattern in this mutual fund?
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 companies. The risk profile in this segment is high.
3) It would invest 0% to 20% in debt and money market instruments including units of debt and liquid schemes. The risk profile in this segment is low to medium.
4) It would invest 0% to 20% in foreign securities.
5) It can invest in derivatives, but with the limit of 50%.
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 large cap funds.
1) Large cap funds invest in large cap stocks which are stable. Since these are large size, these are comparatively safer companies compared to midcap and smallcap companies.
2) These funds are considered relatively safer as these companies are fundamentally strong. These funds that invest in large cap stocks and if there is a huge stock market crash, these would tend to recover faster during the recovery phase.
3) Large cap stocks pay dividend too. This could provide dividend yield to your large cap fund’s portfolio though not guaranteed.
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 majorly invests in large cap stocks 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. Debt instruments of corporates have become high risk now.
3) Investors should not assume any guaranteed returns from such funds.
4) It invests up to 20% in foreign securities which would have currency risk.
5) 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.
6) Read the scheme related documents carefully before investing in such schemes.
How is the Performance of existing Large Cap Funds?
Let us see how some of the existing large cap funds have in the last 1 year, especially when stock markets have taken deep correction + recovered faster in the last 3 months.
|Fund Name||6 months||Annualised Returns|
|1 Year||3 Year||5 Year|
|Axis Bluechip Fund||-2.5%||7.8%||9.2%||11.3%|
|Mirae Asset Large Cap Fund||1.2%||6.6%||5.0%||10.9%|
|Canara Robeco Bluechip Equity Fund||2.5%||15.0%||8.1%||10.7%|
|IDFC Large Cap Fund||2.0%||10.6%||3.9%||8.8%|
|Sundaram Select Focus Fund||-2.7%||4.3%||4.9%||8.8%|
|ICICI Prudential Bluechip Fund||1.4%||4.7%||3.5%||8.8%|
|HSBC Large Cap Equity Fund||-1.1%||3.6%||2.8%||8.5%|
|Quant Focused Fund||7.5%||10.0%||3.0%||8.4%|
|Edelweiss Large Cap Fund||-0.3%||5.8%||5.4%||8.4%|
|Motilal Oswal Focused 25 Fund||-1.8%||9.8%||3.3%||8.3%|
Should you invest in the Principal Large Cap Fund NFO?
This mutual fund scheme invests in large cap stocks. Large cap stocks provides stable returns to investors. Don’t expect such stocks to be multi baggers. Large cap funds can provide 10% to 15% annualized returns if invested in medium to long term. If you want to test such new large cap funds, you can invest. Otherwise, you can invest in some of the best large cap mutual fund schemes we recommended earlier.
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