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Large Cap funds are the open ended equity schemes which invest in large cap stocks. Large Cap Stocks are those as defined as the top 100 by market capitalization of the listed companies as per BSE/NSE. All the Fund managers need to align their portfolios entirely from this universe only. The normal benchmark to compare the performance of the large cap funds are any of the two indices i.e. NSE Fifty popularly called Nifty or BSE Thirty popularly known as Sensex.
Portfolio should be a maximum of 80% of total assets invested in equity & equity related to Large Cap companies.
Mid cap funds are open ended schemes that invest in Equity shares that range from 101 to 250 top listed companies as per their market capitalization in the stock markets i.e. NSE / BSE. The portfolio construct must contain at least 65% of total assets invested in equity & equity related to Mid cap companies. The normal benchmark to compare the performance of Midcap Funds is BSE Midcap Index
Equity as an asset class itself is risky and needs investors to stay invested for a reasonable period of time to ride out volatility and generate reasonable returns. Among the two, Large cap funds are less prone to high volatility and also grow in line with the index growth. On the other hand Midcaps have sharper rise and sharper fall when the markets turn volatile.
Therefore Large cap funds are suggested to invest at least 3 to 5 years, Mid cap funds are suggested for a slightly longer tenure say 5 to 7 years to enable the investor to see optimum returns.
Investors who are looking for lower risk with long term investment will go for large cap funds, Investors who are looking for higher risk with higher returns will go for Mid cap funds.
Taxation in Mid & Large cap funds:
Short term capital gain tax: If the investments are held for less than a year the gains are short term and taxed at 15% flat rate.
Long term capital gain tax: If the investments are held for more than a year, the gains are categorized as long term. While such gain upto Rs 1 Lakh is free of tax, beyond that the client is taxed at 10% rate.
Top 5 Large cap funds are: ( 20th Nov 2021)
S.No |
Scheme Name |
1 yr return |
3 yr return |
5 yr return |
1 |
Canara Robeco Bluechip Equity Fund |
37.63% |
24.22% |
20.92% |
2 |
Mirae Asset Large Cap fund |
39.04% |
20.35% |
19.16% |
3 |
Axis Bluechip Fund |
33.64% |
23.19% |
21.86% |
4 |
Invesco India Large Cap fund |
44.65% |
21.94% |
18.68% |
5 |
Kotak Bluechip Fund |
40.22% |
22.61% |
18.40% |
Top 5 Mid Cap funds are: ( 20th Nov 2021)
S.No |
Scheme Name |
1 yr return |
3 yr return |
5 yr return |
1 |
Invesco India Mid cap fund |
53.82% |
25.73% |
21.93% |
2 |
Axis Mid cap fund |
52.02% |
29.87% |
25.43% |
3 |
SBI Magnum Midcap Fund |
71.37% |
27.94% |
17.69% |
4 |
Nippon India growth fund |
63.29% |
27.17% |
20.94% |
5 |
HDFC Mid cap Opportunities fund |
51.58% |
22.10% |
17.59% |
Conclusion : If you are new to investing or risk averse by nature you must invest in Large Cap Funds only through the Systematic Investment Plan ( SIP ) process to generate long term wealth. However if you have experience in Equity Mutual Fund investing and are comfortable with volatility and the long time horizon, you may have a combination of Large cap & Mid cap funds.
By Sangeetha, Sherpani
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Safe Harbor : Mutual Fund investments are subject to market risks, please read the scheme related documents before investing. The names of the schemes and the performance are not related and investors need to exercise caution before investing. The past performance of the schemes are not representative of the likely future performance of the investment.
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