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Best Large and Mid Cap Funds
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List of Large And Mid Cap Mutual Funds in 2024
What are Large and Mid Cap Funds?
Large and mid cap mutual funds are equity schemes that invest in both large and mid cap companies. These open-ended schemes must invest at least 35% of their assets in both large cap and mid cap companies. Since these are pure equity schemes, the fund is subject to market volatility. Large cap stocks belong to the top 100 companies by market capitalisation. On the other hand, mid cap stocks belong to companies that rank 101 to 250 by market capitalisation.
Furthermore, the large and mid cap category has two types – a fund with a large cap focus and funds with a mid cap focus. The fund that invests more in large cap stocks is relatively less risky than funds that invest more in mid cap stocks. Large cap stocks belong to companies that are market leaders with a proven track record. Thus, these stocks are more or less stable than mid cap stocks. On the other hand, mid cap stocks are companies that have the potential to become large cap stocks. Mid cap stocks are slightly more volatile than large cap stocks.
Therefore, while investing in large and mid cap funds, you must analyse the portfolio holdings. You must pick a suitable large and mid cap fund depending on your risk tolerance levels.
The Following are the Features of Large and Mid Cap Funds
- Large and mid cap funds balance their portfolio holdings between large cap and mid cap stocks.
- The fund manager decides the ratio of large to mid cap stocks. However, the fund must invest at least 35% of its assets in each of the large and mid cap stocks.
- After complying with the minimum investment requirement, the fund can also invest the remaining assets in debt and money market instruments.
- These funds have the capacity to generate higher returns than pure large cap funds.
Top 5 Large and Mid Cap Mutual Funds to Invest 2024
| Fund Name | Return Since Inception | Expense Ratio |
| Baroda BNP Paribas Large and Mid Cap Fund | 25.90% | 2.46% |
| Edelweiss Large & Mid Fund | 11.6% | 2.2% |
| Quant Large and Mid Cap Fund | 13.3% | 2.31% |
| SBI Large & Midcap Fund | 17.6% | 1.91% |
| ICICI Prudential Large & Mid Cap Fund | 18.20% | 2.03% |
Who Should Invest in Large and Mid Cap Funds?
Large and mid cap funds invest at least 35% of their assets in both large cap companies and mid cap companies. Since the fund has exposure to both categories, it has the capacity to earn higher returns than pure large cap funds. The relative stability of large cap stocks and the potential of mid cap stocks to generate significant returns is a combination that helps investors earn good returns. Thus, rather than investing in pure mid cap stocks that are risky, you can consider investing in this category.
Furthermore, since these funds are pure equity schemes, a long term investment horizon is necessary. A long term investment horizon will help you average out the market volatility. Thus, helping you earn better returns. Since these funds invest in midcap companies, the risk is on the higher side. Thus, these funds may not be suitable for investors with low-risk tolerance levels.
Finally, if you are an investor who understands market dynamics and is comfortable with volatility and risk levels, you can consider investing in large and mid cap funds. Furthermore, it is necessary to keep track of your investments and make necessary adjustments if required. Also, a long term investment horizon will help you overcome the effects of market volatility and help you generate significant returns.
Benefits of Investing in Large and Mid Cap Funds
- Returns: Large and mid cap funds are pure equity schemes that have the capacity to generate significant returns in the long term. Since the fund invests in both large cap stocks and mid cap stocks, the scheme has the potential to generate returns higher than a pure large cap fund. Furthermore, the stability of large caps stocks and good growth potential from mid caps will help in building wealth over the long term.
- Portfolio Diversification: The fund portfolio is well-diversified as large and mid cap funds invest across the top 250 companies by market capitalisation. A well-diversified portfolio has the potential to perform well across different market scenarios. Thus, the returns can be significant in the long term.
- Expert Fund Management: The fund management team dynamically rebalances the assets in the portfolio to take advantage of the market movements while adhering to the fund’s investment objective. Thus, the fund manager’s experience and expertise will significantly impact the fund’s performance.
- Long Term Investment: These funds are pure equity schemes. Equity funds are highly volatile in the short term. In other words, the fund’s returns fluctuate with market movements. Thus, to generate significant returns, you must have a long term investment horizon. Over the long term, the effect of market volatility averages out. Therefore, these funds are suitable for your long term investment goals such as retirement, child’s education, buying a house, etc.
Frequently Asked Questions
No, large and mid-cap funds do not have any lock-in period. However, these funds may have an exit load. The fund house charges an exit load for withdrawing the investments within one year. The exit load percentage varies from fund to fund and AMC to AMC. Therefore, while exiting your investments, you must consider the exit load.
Yes, multi-cap funds invest across large-cap, mid-cap and small-cap companies. While large and mid-cap invest only in large-cap and mid-cap companies. Therefore, multi-cap funds are more diversified than large and mid-cap funds.
Yes, both large and mid-cap funds and ELSS funds are open-ended equity schemes. Therefore, their taxation is similar to all equity mutual funds. The tax liability depends on the holding period of the investments and the returns. For capital gains withholding period of less than one year, attract short term capital gains tax (STCG). The short term capital gains are taxable at 15%.
On the other hand, if the holding period is more than one year, the long term gains attract long term capital gains tax (LTCG). The long term capital gains above INR 1,00,000 are taxable at 10%.
Large and mid-cap funds are pure equity schemes. The fund is subject to market risks. Thus, a long term investment horizon is necessary. Ideally, the investment horizon should be more than five years. Long term investment horizon will help you average out the short term market volatility. As a result, the fund is more suitable for your long-term goals than short-term goals.