Large & Mid Cap Mutual Funds: Meaning, Benefits

Most large and mid cap funds typically invest between 35 and 40% of their assets in mid-cap equities and between 50 and 60 percent in large-cap firms.

Large & Mid Cap Mutual Funds IS WHAT?

In compliance with Sebi regulations, a large and mid cap fund is one that needs to invest at least 35% of its portfolio in large-cap companies, 35% in mid-caps, with the remainder 30% to be allocated depending on the fund manager’s discretion. Large-cap equities are those publicly traded corporations with market capitalization rankings between 1 and 100 on the stock exchanges, whereas mid-cap firms have rankings between 101 and 250.

HOW MUCH ASSETS IS MANAGED BY THIS FUND CATEGORY?

According to information from the trade association AMFI, there were 26 big and mid size plans with 76.75 lakh folios managing assets worth ‘1.27 lakh crore as of January 31, 2023.

WHY SHOULD THESE FUNDS ATTRACT INVESTORS?

Consider investing in a large and mid cap fund if you want to take advantage of both the stability of largecaps and the great growth potential of mid-caps through a single fund. It is intended for risk-taking investors with a minimum five-year investment horizon who can tolerate short-term volatility.

WHAT ARE THE BENEFITS OF A LARGE AND MID CAP FUND?

A large and mid cap fund invests in a variety of large and mid-cap firms, giving investors stability and development within the equity market. The top 100 market capitalization-ranked companies are large-cap firms, while the following 150 are mid-cap firms. The fund management has the discretion to determine where the remainder of the portfolio needs to be placed based on how the market is performing, even though large- and mid-caps must account for 35% of each investment.

A fund manager has the opportunity to spread the corpus across market caps by using the large and mid cap area. The fund manager can devote up to 65% of the portfolio to cash when the market is declining.