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Large-cap funds invest in stocks which are classified as large-cap or those which have the highest market capitalisation.

According to the new Securities and Exchange Board of India guidelines, schemes classified as large-cap can invest a minimum of 80% of their assets in the top 100 listed stocks. This defines the large-cap universe as the top 100 stocks by market capitalisation listed on exchanges. The rest 20% can be invested in mid- or small-cap stocks. These large-cap stocks are also known as bluechips and usually represent companies which are market leaders in their respective sectors or industries.

The category norm defined here is relevant for actively managed large-cap funds. You can also invest in passive large-cap funds whose underlying portfolio mirrors indices like S&P BSE Sensex and Nifty 50.