Large and Mid Cap Mutual Funds: The Best of Both Worlds

In the vast expanse of the investment universe, there exists a realm where titans clash and underdogs rise. It’s a land of opportunity and uncertainty, where fortunes are forged and dreams take flight. Welcome to the captivating world of large and mid-cap mutual funds, where the stakes are high, the rewards are alluring, and the journey is nothing short of extraordinary.

What are Large and Mid Cap Mutual Funds?

As per SEBI’s categorization, large-cap companies are those ranked from 1st to 100th based on market capitalization, while mid-cap companies are ranked from 101st to 250th. Large and Mid Cap mutual funds are mandated to invest a minimum of 35% of their total assets in each of these categories. While the remaining 30% of their assets can be invested in companies as per fund managers call and assesment of market situation.

Why Invest Now in Large & Mid-cap Fund?

• Robust Economic Outlook: India’s GDP is projected grew at 7.6% in 2023 according to World Bank. And it is expected to continue to grow 7.2% this year (2024), outpacing most major economies. This strong economic growth is expected to fuel corporate earnings, benefiting both large and mid-cap companies.

• Favorable Demographics: India boasts a young and growing population, providing a large consumer base and a vibrant workforce. This demographic dividend is expected to drive consumption and investment, creating opportunities for businesses across various sectors.

• Government Initiatives: The government’s focus on infrastructure development, digitization, and ease of doing business is creating a conducive environment for growth, particularly for mid-cap companies.

• Attractive Valuations: After a period of correction, large-cap stocks are currently trading at attractive valuations, offering potential for significant upside in the long run.

• Macro economics impact: While government capex on increasing trajectory from more than 6 year resulting in huge infrastructure development, government is able to bring down fiscal deficit.

• Diversification: These funds offer built-in diversification by investing in companies across different market capitalizations. This helps to reduce risk compared to investing in only large-cap or mid-cap funds.

• Growth Potential: Mid-cap companies often have higher growth potential than large-cap companies, as they are still in their expansion phase. This can lead to higher returns for investors over the long term.

• Stability: Large-cap companies tend to be more established and stable than mid-cap companies, providing a degree of stability to the portfolio. This can help to cushion the impact of market volatility.

• Suitable for a Wide Range of Investors: Large and Mid Cap funds are suitable for a wide range of investors, including those who are looking for a balance of growth and stability in their portfolios.

How did Large & Mid-cap Index and Funds performed historically?

As of now there are 35 mutual funds schmes in this category. Below table show trailing returns of top 5 mutual fund schemes over last 1, 3,5 and 10 years along with returns of Nifty 50 TRI Index.

Fund Name	Returns (%)
	1 Year	3 Years	5 Years	10 Years
Quant Large & MidCap	59.35	30.48	31.27	20.84
Mirae Asset Large and Midcap Fund	38.6	18.31	24.82	20.61
Canara Robeco Emerging Equities	41.79	18.82	24.75	18.66
Sundaram Large and MidCap	44.75	21.52	25.38	18.02
Kotak Equity Opp	43.4	22.75	25.07	17.35
Category Average	45.1	21.96	24.68	16.39
NIFTY LARGE MIDCAP 250 TRI	43.4	23.27	26.4	17.44
NIFTY 50 TRI	29.44	16.02	19.61	13.48

New Funds in Large & Mid-cap Category

Over the past six months, approximately three new funds have been launched in this category. While this is a relatively short period to assess their performance, it does offer insights into the category’s short-term behavior.

Fund Name	Returns (%)
	1 Month	3 Month	6 Month
PGIM India Large and Mid Cap	2.99	11.37	17.91
Bajaj Finserv Large and Mid Cap	3.55	12.75	-
Whiteoak Capital Large & Mid Cap	3	11.46	18.44

New Fund Offers (NFO) Open now

ITI Mutual Fund has recently launched a New Fund Offer (NFO) for its Large & Mid-Cap Mutual Fund Scheme. The scheme offers a broad coverage of over 500 stocks. The fund house will then screen these 500 companies based on internal filters that focus on business metrics such as balance sheet strength, a 5-year track record, return on equity (ROE), and return on capital employed (ROCE). In accordance with the fund category requirements, a minimum of 35% will be invested in large-cap companies and 35% in mid-cap companies. The remaining 30% can be allocated across various market caps, including small-cap companies, or up to 10% in REITs.

NFO Details

Launch Date	21st August 2024
Closing Date	04th September 2024
Minimum Investment	Rs. 5000.00
Systematic Investment Plan (SIP)	Rs. 500 and above (minimum 6 instalments)
Exit Load	0.50% if redeemed or switched out on or before completion of 3 months from the date of allotment of units
Category of Scheme	Large & Mid-Cap Fund
Benchmark Index	NIFTY LARGE - MIDCAP 250 Index (TRI)
Fund Managers	All funds will be managed in a co-fund manager model. Co-managed by Mr. Vishal Jajoo and Mr. Rohan Korde
NFO Presentation	View Document

Things to Consider Before Investing

• Risk: While large and mid-cap funds are generally considered less risky than small-cap funds, they are still subject to market fluctuations and can experience volatility.
• Investment Horizon: These funds are best suited for investors with a long-term investment horizon, as they can ride out short-term market fluctuations and benefit from the long-term growth potential of mid-cap companies.
• Fund Selection: It is important to carefully select a large and mid-cap fund with a proven track record and a strong investment team.

Conclusion

Large and Mid Cap mutual funds offer a compelling investment option for investors seeking a balanced approach to equity investing. By investing in both large-cap and mid-cap companies, these funds provide a mix of stability and growth potential. However, as with any investment, it is important to do your research and understand the risks involved before investing.

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Disclaimer: Mutual fund investments are subject to market risks. Read all scheme related documents carefully before investing.