WHAT IS A LARGE AND MIDCAP FUND?
Large and midcap funds are a category where as per regulatory requirements, the fund manager has to invest at least 35% of the corpus in large-cap stocks, 35% in mid-cap stocks, and the balance 30% is left to the fund manager’s discretion. Large-cap stocks are those ranked 1-100 by market capitalisation, while mid-cap stocks are those ranked 101-250. Such a fund gives an investor exposure to the top 250 companies by market capitalisation. Of the balance 30%, fund managers chasing higher returns could add more midcaps and small-caps to their portfolios. Funds that want more stable returns with lower volatility could allocate the balance component to large caps.
HOW BIG IS THE LARGE AND MIDCAP MF CATEGORY?
As of January 31, 2024, the large and midcap category has assets of Rs 1.90 lakh crore, with 29 schemes and investors holding 8.9 million folios.
WHAT IS THE ADVANTAGE OF INVESTING IN THE LARGE AND MIDCAP CATEGORY?
The large and midcap category gives investors a balance of growth and stability in their equity portfolio and eliminates the need for investors to buy into separate schemes for their portfolios.WHO SHOULD OPT FOR LARGE AND MIDCAP SCHEMES?
Financial planners point out that these schemes are ideal for those looking to accumulate wealth through a long-term SIP for periods of 10 years and above. Financial planners believe investors can use this scheme to meet long-term goals like buying a house, children’s education, or retirement that is over 10 years away. These funds can also suit investors who do not like the associated volatility that comes with midcaps and do not want to invest in pure midcap funds. This is because, in such a scheme, at least 35% of your corpus is invested in large-cap stocks which tend to deliver stable returns even in choppy markets.
