Want to invest in both large-cap stocks and mid-cap stocks at the same time? Then your go-to solution could be large and mid cap funds. These funds bring the stability of large-cap stocks and the growth potential of mid-cap stocks, providing the best of both worlds. In this blog, we’ll go into detail about the meaning of a large and mid cap fund, the 5 best large and midcap funds, and their benefits.
What is Large and Mid Cap Fund?
As per the SEBI rule of equity funds, a large and mid cap fund has to invest at least 35% of its assets in each of the large-cap stocks and mid-cap stocks. This means that 70% goes into the equity instruments and the rest will be dependent on the fund manager’s decision.
Large-cap stocks rank in the top 100 companies in terms of market capitalization while mid-cap stocks rank from 101 to 250. So, a large and mid cap fund provides you exposure to the top 250 companies without the hassle of picking and choosing the best one.
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Top 5 Large and Midcap Fund to Invest Now
Here is the list of the 5 best large and midcap funds (Direct-Growth) to invest in for the long term:
| Large and Mid Cap Fund Name | Benchmark | Fund Size (in ₹ crores) | 1 Year Returns (%) | 5 Year Returns (%) | Expense Ratio (%) | ||
|---|---|---|---|---|---|---|---|
| Fund | Benchmark | Fund | Category Avg | Fund | |||
| Motilal Oswal Large and Midcap Fund | Nifty LargeMidcap 250 TRI | ₹6,840.21 | 50.37% | 22.50% | 27.44% | 0.72% | 0.51% |
| Quant Large and Mid Cap Fund | Nifty LargeMidcap 250 TRI | ₹3,708.99 | 32.07% | 22.50% | 26.38% | 0.72% | 0.61% |
| Bandhan Core Equity Fund | Nifty LargeMidcap 250 TRI | ₹6,916.82 | 41.14% | 22.50% | 24.73% | 0.72% | 0.61% |
| ICICI Prudential Large & Mid Cap Fund | Nifty LargeMidcap 250 TRI | ₹17,120.29 | 33.67% | 22.50% | 24.23% | 0.72% | 0.81% |
| Mirae Asset Large and Mid cap Fund | Nifty LargeMidcap 250 TRI | ₹38,166.21 | 28.07% | 22.50% | 21.94% | 0.72% | 0.61% |
*(Data as on November 26, 2024)
Overview of the Top 5 Large and Midcap Funds
Here are the details of the 5 best large and midcap funds (as on November 26, 2024):
1. Motilal Oswal Large and Midcap Fund
Motilal Oswal Large and Midcap Fund NAV is ₹35.34. The minimum SIP amount is ₹500 while the lump sum investment is ₹500. The fund’s alpha is 10.89 and beta is 0.92. The top 3 stock allocations of this fund are Trent, Zomato, and Kalyan Jewellers India.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Motilal Oswal Large and Midcap Fund would grow to approx ₹1.28 lakhs.
2. Quant Large and Mid Cap Fund
Quant Large and Mid Cap Fund NAV is ₹125.70. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹5,000. The fund’s alpha is 9.02 and beta is 1.04. The top 3 stock allocations of this fund are HDFC Bank, Reliance Industries, and ITC.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Quant Large and Mid Cap Fund would grow to approx ₹1.24 lakhs.
3. Bandhan Core Equity Fund
Bandhan Core Equity Fund NAV is ₹149.32. The minimum SIP amount is ₹100 while the lump sum investment is ₹1,000. The fund’s alpha is 8.07 and beta is 0.99. The top 3 stock allocations of this fund are ICICI Bank, HDFC Bank, and Reliance Industries.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Bandhan Core Equity Fund would grow to approx ₹1.18 lakhs.
4. ICICI Prudential Large & Mid Cap Fund
ICICI Prudential Large & Mid Cap Fund NAV is ₹1,039.31. The minimum SIP amount is ₹100 while the lump sum investment is ₹5,000. The fund’s alpha is 6.97 and beta is 0.88. The top 3 stock allocations of this fund are Maruti Suzuki India, Bajaj Finserv, and ICICI Bank.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in ICICI Prudential Large & Mid Cap Fund would grow to approx ₹1.16 lakhs.
5. Mirae Asset Large and Mid cap Fund
Mirae Asset Large and Mid cap Fund NAV is ₹162.90. The minimum SIP amount is ₹99 while the lump sum investment is ₹5,000. The fund’s alpha is 0.50 and beta is 0.94. The top 3 stock allocations of this fund are HDFC Bank, Axis Bank, and State Bank of India.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Mirae Asset Large and Mid cap Fund would grow to approx ₹1.09 lakhs.
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Pros of Large and Mid Cap Fund
1. Diversification
A large and mid cap fund provides the proper diversification of large-cap stocks and mid-cap stocks effectively balancing the risk and return. In times of market uncertainties, large-cap stocks balance out the risk while in times of market upside, mid-cap stocks generate alpha-beating returns.
2. More Growth than Pure Large Cap Funds
Large and mid cap funds are better than pure large cap funds which have maximum exposure to large-cap stocks. Large-cap stocks are the companies that are well-established and in the long run, there are fewer chances that they can give market-beating returns. On the other hand, a large and mid cap fund also has mid-cap stocks which have a high growth potential and can give really good returns in the long run.
3. Less Risky than Pure Mid Cap Funds
Mid cap funds invest the maximum amount of money in mid-cap stocks which are prone to volatility and high risk. With a large and mid cap fund, the risk of mid-cap stocks gets toned down with the stability of large-cap stocks in the portfolio.
4. Suitable for 5 Years of Investment
These mutual funds are good for investors who have an investment horizon of 5 years and can take a high level of risk. Over a long period of time, these funds tend to beat the benchmark returns and can compound your invested amount.
Cons of Large and Mid Cap Fund
1. Not for Low-Risk Takers
A large and mid cap fund is not ideal for someone who wants to invest for a short period and has a low-risk profile. In the short term, these funds generally do not give higher returns and are more prone to market volatility.
2. Fund Manager Bias
In this mutual fund, the fund manager plays a key role in picking the right stocks from both the large- and mid-cap stocks realm. One wrong decision can lead to a fall in returns or unnecessarily extra risk for the investors.
Taxation Rule of Large and Mid Cap Fund
The large and mid cap fund capital gains are taxed as per the rule of equity funds. For a holding period of more than 12 months, LTCG is taxed at 12.5% only if it is more than ₹1.25 lakhs in a financial year. For a holding period of less than 12 months, STCG is taxed at a rate of 20% with no exemption limit.
Conclusion
The answer to what is large and mid cap fund lies in its name, as this fund has to invest both in large-cap and mid-cap stocks. Lower volatility of large-cap stocks and high-returns earnings of mid-cap stocks make these funds ideal for investment for a long period. There are a few best large and midcap funds that can give good returns at a lower cost of investing (expense ratio).
But while investing in any mutual fund, it is better to do your research and keep your investment objective in mind. Open Demat account with SMC Global Securities and keep investing in stocks, or mutual funds like a pro.
FAQs
1. What is a large-cap and mid-cap fund?
A large and mid-cap fund is an equity mutual fund that invests both in large-cap and mid-cap stocks and provides the benefits of diversification with high returns.
2. Which is the best large and midcap fund in India?
One of the best large and midcap funds in India is Motilal Oswal Large and Midcap Fund as it has given benchmark-beating returns in the last 5 years and has a lower expense ratio as well.
3. What is the difference between large and mid-cap funds and multi cap funds?
The large and mid cap funds invest majorly in large-cap and mid-cap stocks. While multi cap funds have to invest in all of the three stocks, i.e., large, mid, and small-cap stocks.
References:
https://www.smctradeonline.com/invest/mutual-funds
https://economictimes.indiatimes.com/definition/large-and-midcap-funds
Author: All Content is verified by SMC Global Securities.
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