LARGE AND MID CAP MUTUAL FUNDS

 

WHAT IS A LARGE AND MID CAP FUND

                                                                                                In line with SEBI regulation, a large and mid cap fund is one that needs to invest at least 35% of its portfolio in large-cap stocks, 35% in mid-cap, with balance 30% to be allocated based on the fund manager direction. Large –cap companies are those listed companies that are ranked from 1 to 100 on the stock exchange in terms of market capitalization, while mid-cap companies are with ranked between 101 and 250 by market cap.

HOW MUCH ASSETS DOES THIS FUND CATEGORY MANAGE

                                                                                                                                As per data by industry body AMFI, as of jan 31,2023, there are 26 large and mid cap scheme with 76.75 lakh folios managing assets worth 1.27 lakh crore.

WHO SHOULD INVEST IN THESE FUNDS

                                                                                                Investor looking to benefit from the stability of large-cap and the high-growth potential of mid-caps through a single fund can consider an investment in a large and mid cap fund. It is meant for investor with high risk appetite who can bear short term volatility, and have investment horizon of at least 5 years.

WHAT ADVANTAGES DOES A LARGE & MID CAP FUND OFFER

                                                                                                                                A large and mid cap fund provides investors both stability and growth within the equity universe as it invests in a combination of large and mid-cap companies. While the top 100 companies in terms of market capitalization are large cap companies, the next 101-250 companies are mid – cap. While 35% each is mandated to be invested in large and mid-cap , the fund manager has the flexibility to decide where the balance portfolio needs to be invested based on how the market is performing. The large and mid cap space gives a fund manager chance to deploy the corpus across market caps. When the market is headed downwards, the fund manager can allocate upto 65% of the portfolio towards large-cap to protect the downside and maintain the remaining 35% in mid-cap as mandated by the market regulator. Similarly, in a rising market scenario, the fund manager can allocate a higher proportion of the capital towards mid-cap and small-cap companies to lift the overall returns. Typically most large & mid cap funds invest around 50-60% of asset in large-cap stocks.

Source: Economic Times