What are Large and Mid Cap Funds?

Large and mid cap funds are a category of mutual funds that invest in a mix of large and mid-sized companies in terms of market capitalisation. Such funds seek to balance the relative stability of large caps with the growth potential of mid caps.

Unlike pure large cap funds, which invest predominantly in companies with large market capitalisations, or mid cap funds, which focus on medium-sized companies, large and mid cap funds can potentially combine the benefits of both.

Investment Strategy

Large cap companies are typically industry leaders with stable returns, while mid-cap companies are those in the process of expanding their market presence, often offering higher growth potential. This unique investment strategy allows large and mid cap funds to seek to strike a balance between relative stability and long term growth potential.

Growth Potential

Large and mid cap funds have a higher growth potential than large cap funds because the mid cap section of their portfolio provides room for expansion. Moreover, they can offer more relative stability than pure mid cap funds, owing to the large cap component.

Diversification

Diversification is one of the key advantages of large and mid cap funds. Investors gain exposure to a broad spectrum of industries and company sizes which can mitigate both the risk and the possible limitations associated with investing in a single company, sector, or market capitalisation.

Risk and Returns

While large and mid cap funds offer the potential for higher returns compared to pure large-cap funds, they also come with higher risk due to the inclusion of mid-cap stocks. A long investment horizon is typically recommended for equity funds because markets can be volatile in the short term but tend to stabilise over longer horizons.

Market Exposure and Liquidity

These funds provide broad market exposure, including to emerging sectors and established industries. They also ensure liquidity, making it easier for investors to enter or exit the fund based on their financial goals and market conditions.

Suitability

Large and mid cap funds are suited for investors looking for a blend of long term growth potential and relative stability. They are ideal for those with a high risk appetite looking for capital appreciation over the long term.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.