Impact of Market Fluctuations on Large-cap Mutual Funds

Large-cap mutual funds include stocks of companies that have a bigger capital outlay. Large Cap companies are known for their high capitalization, better growth, and returns through investment. Large-cap mutual fund is a safe investment option compared to other forms like midcap or small cap funds. Moreover, investors opt for SIP in large-cap mutual funds for increased and better returns. A systematic investment plan calculator is used for investment and to calculate the average returns the large-cap mutual funds can deliver.

However, market and economic estimations can impact the returns of large-cap mutual funds. Changing economic conditions, geopolitical tensions like wars, interest-rate changes, political changes, and various other factors can affect large-cap mutual returns. The following points can help investors in understanding the impact of market fluctuations on large capital mutual funds:

Stock price fluctuations 

Market volatility in terms of geopolitical risks and a significant change in interest rates by the government can hurt the stock prices of large-cap mutual funds. Despite the positive functionality and growth of large-cap companies, market fluctuations, and a downturn can reduce the returns of large-cap mutual funds. The stock prices can fluctuate drastically which is beyond the control of any investor.

Change in returns

Market fluctuations and volatility can even affect the returns on the investment in large-cap mutual funds. The individual stock prices which make up the large-cap mutual funds can fluctuate which can further reduce the average return on investment. Political uncertainty or negative investor sentiment can reduce the returns.

Reduction in NAV 

The net asset value of a large-cap mutual fund can be affected as well through market regulation and changes. Due to unwonted circumstances like negative investor confidence, investors can indulge in panic selling which ultimately results in a reduction of the NAV of the large-cap funds. This puts a lot of pressure on the market value of the large-cap mutual funds.

Reinforce investment

Market fluctuations may even have a positive effect on large capital funds. Mutual fund managers keep a certain portion of invested money as liquid funds in the form of cash which can be invested in times of uncertainties. Due to a negative effect on the market value of large-cap mutual funds, more investments can be made in the same for better returns in the long run.

Effect upon particular sectors

Large-cap mutual funds include stocks of companies working in sectors like FMCG, technology, finance, etc. Market fluctuations and downturns can prove to be a boon for some sectors and a bane for others. For example, in case of market uncertainties, the stock prices of the FMCG sector generally boost up due to negative market sentiments. Different sectors may behave differently in case of any risk or volatility in the market.

Market fluctuations can be easily mitigated through systematic investment plans in the best large cap mutual funds. SIP, regular monitoring, and diversification can enable investors to negate the effect of market situations on mutual fund returns. Impact of Market Fluctuations