Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.

5 key characteristics of large cap stocks

For a very long time, investing in equity was considered to be a risk game played by the high income and high net worth investors. Fortunately, the investment patterns have changed over the years. Investors now possess at least basic knowledge of the market. What continues is the risk! It’s true that investing in equity comes with an inherent risk. Large cap companies are often considered to be less risky investments which generally come at high price. Do they really reduce risk? What are the other facets of large cap stocks? Let’s learn 5 key characteristics of large cap stocks.

Stability of business

Investing in Large Cap Stocks

Large cap companies generally have built reputation in the market over the long tenure of business. They are less likely to get affected by hazardous circumstances in the economy where the company stops generating profits. Thus the biggest advantage of large cap companies is the stability they are assumed to provide to your portfolio. This builds trust in the minds of investors which enables high investments in these stocks.

Dividend Payouts

5 characteristics of quality Large Cap Stocks

Large cap companies generally provide stability but aren’t typically nominated for high growth rates as they are already popular and established companies in the market. Often they provide a stable but gradual growth in the capital appreciation. But large cap companies also provide an advantage of steady dividend payouts which can compensate shareholders despite lack of short term growth and these dividends may show impressive accumulated returns in the long term wealth creation process. Large caps which payout dividends regularly are generally considered the favorite stocks of investors who like to stay invested for a long period of time.

Available data for evaluation

data evaluation for large cap stocks

Unlike we discussed in the previous post, large cap companies have a long tenure of business which avails investors with adequate data to study performance over the years. Specific information about such companies is readily available on the internet and other news media. This analyst data gives an overall perspective to determine if the company is worth the investment. A detailed study of large cap companies is possible due to periodically shared financial statements and insights.

Quality of management and business

Large cap stocks, large cap stocks

Managing a large cap company takes a great experience and entrepreneurial spirit to lead a sustainable and constant growth. Quality of management and business are essential parameters while choosing a stock to invest in. Growth of quality companies can be anticipated by the management who make the right decisions and deliver performance.

Sync with the economy

blue chip stocks

The performance of large cap companies generally represent the economic scenario. Investments in large cap companies are well reflected on the market indices. They have a potential to forecast economy. Such companies are rarely affected by volatility in the market hence are considered to be risk diffusers. Although the quality large cap stocks are at higher price, they are beneficial in the rising economy for a long term investment.

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Disclaimer:The information herein alone is not sufficient and should not be used for the development or implementation of an investment strategy and shall not constitute as an investment advice. MOAMC shall not be liable for any direct or indirect loss arising from the use of any information contained in this document. Readers shall be fully responsible for any decision taken on the basis of this document. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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