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Fincash » Mutual Funds » Large Cap Vs Mid Cap Funds

Large-Cap vs Mid-Cap Mutual Funds

Updated on December 2, 2019 , 910 views

Heard about large-cap and mid-cap funds? But, how do they differ (large-cap vs mid-cap) from each other? This is often a confusing category for an investor when planning to invest in Equity Funds. Nevertheless, one good thing is— we are here to clear your confusion! So, let us first understand these terms individually and in a bit detail.

Large Cap Funds

A large cap fund is a type of fund where investment is made in majorly with companies of large market capitalization. These are essentially large companies with large businesses. Large cap stocks are also commonly referred to as blue chip stocks. One essential fact about the large cap is that information regarding such large companies is easily available in publications (magazines/newspapers).

Mid Cap Funds

Mid-cap funds invest in mid-sized companies. Stocks held in mid-cap funds are the companies that are still developing. These are mid-size corporates that lie between large and small cap stocks. They rank between the two extremes on all important parameters like company size, client base, revenues, team size etc.

Large-Cap Vs Mid-Cap

Large Cap v/s Mid cap

Market Capitalization

Large caps are shares of well-established companies that have a strong hold on the market and are usually considered as safe investments. They are companies that have a market capitalization (MC= no of shares issued by the company X market price per share) of more than INR 10,000 crore. Mid caps could be companies with a market capitalization of INR 500 Cr to INR 10,00 Cr.

From a standpoint of the investor, the Investing period of mid-cap funds should be much higher than large-caps due to the nature of the companies.

Recently sebi has classified how AMC's to classify largecaps and midcaps.

Market Capitalization Description
Large cap company 1st to 100th company in terms of full market capitalization
Mid cap company 101st to 250th company in terms of full market capitalization
Small cap company 251st company onwards in terms of full market capitalization

Investing Period

Large-cap funds invest in those firms that have more possibility of showing year on year steady growth and high profits, which in turn also offers stability over a time. These stocks give steady returns over a long period of time. When an investor invests in mid caps for a long term, they prefer those companies that they think will be tomorrow’s runway successes. Also, the greater the number of investors in mid-cap stocks, the more it tends to grow in size. Since the price of large caps has increased, large institutional investors like Mutual Funds and Foreign Institutional Investors (FIIS) are increasingly investing in mid-caps these days.

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Companies

Infosys, Wipro, Unilever, Reliance Industries, ITC, SBI, ICICI, L&T, Birla, etc., are a few blue chip companies in India. These are the firms that have established themselves well in the Indian market and are leading players.

Some of the most emerging, mid-cap companies in India are- Blue Star Ltd., Bata India Ltd., City Union Bank, IDFC Ltd., PC Jeweller Ltd., etc.

Large cap funds mid cap funds
Invest in stocks of well-established companies Invests in stocks of developing companies
Market Capitalization- INR 1000 Cr Market Capitalization- INR 500- 1000 Cr
Less Volatile High Volatile
Companies eg- Wipro, Infosys. Unilever, Reliance Industries, etc. Companies eg- Bata India, PC Jeweller, City Union Bank, Blue Star, etc.

Investing Benefits: Large Cap VS Mid Cap

  • Companies that invest in mid-cap have more potential for growth than large-cap
  • Mid-cap funds often tend to outperform large cap funds
  • Large companies are well-established which means that they have more consistent income. That is why the greatest benefits that large cap stocks have in their favour is the stability they can provide to one’s investments.
  • Large cap funds are less volatile than mid-cap funds
  • During the downturn in the market/business, investors flock to large cap firms as they are a safer investment.

Best Large Cap Funds FY 19 - 20

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2018 (%)
Indiabulls Blue Chip Fund Growth ₹22.37
↑ 0.09
₹19112.41.211.613.69.1-1.4
Essel Large Cap Equity Fund Growth ₹23.9919
↑ 0.08
₹10410.90.610.511.78.5-6
BNP Paribas Large Cap Fund Growth ₹96.94
↑ 0.31
₹80810.54.917.614.68.6-4
Canara Robeco Bluechip Equity Fund Growth ₹26.87
↑ 0.11
₹25712.84.615.215.78.93.4
Kotak Bluechip Fund Growth ₹249.945
↑ 0.86
₹1,44412.93.414.312.78.3-2.1
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 4 Dec 19

Best Mid Cap Funds FY 19 - 20

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2018 (%)
Motilal Oswal Midcap 30 Fund  Growth ₹26.5106
↑ 0.18
₹1,62513.84.812.26.79.2-12.7
BNP Paribas Mid Cap Fund Growth ₹32.299
↑ 0.11
₹75710.3-1.86.37.67.6-17.5
Edelweiss Mid Cap Fund Growth ₹26.76
↑ 0.03
₹94510.3-1.75.59.88.4-15.7
SBI Magnum Mid Cap Fund Growth ₹71.2466
↑ 0.47
₹3,5239.1-3.11.72.66.1-18
Aditya Birla Sun Life Midcap Fund Growth ₹272.92
↑ 2.16
₹2,3568.4-6.3-2.94.46.3-16
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 4 Dec 19

Conclusion

Investors need to determine their mid-term & large term goals and build their portfolio accordingly. Your Financial goals create a big impact on kind of investments you make. So, invest smartly!

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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