10 Best Large and Midcap Funds

What are ‘Large and Midcap’ funds?

Large and midcap funds are open-ended equity mutual funds, which have to invest at least 35% of their total assets in both large cap and midcap companies. According to the SEBI regulations, large cap companies are those ranked 1^st-100th in terms of full market capitalisation whereas mid cap companies are those ranked from 101st to 250^th in terms of full market capitalisation. 

Why invest in ‘large and midcap’ funds?

• Ideal fund category for those seeking growth with stability
• Exposure to large cap stocks offers stability and reduces volatility
• Exposure to midcap stocks enhances growth prospects
• Blended portfolios may give relatively superior risk-adjusted performance than large cap funds and mid cap funds
• Can strengthen the core of your equity portfolio to help to achieve long term financial goals

Table of Best Large and Midcap Funds:

(Data as on February 11^th 2021 : Source: Value Research) 

Investment Strategies of Best ‘Large and Midcap’ Funds

Mirae Asset Emerging Bluechip Fund

• Invest in emerging companies that have the potential to be future’s bluechip companies
• Follows bottom-up investment approach driven by value investing in growth oriented businesses
• Prefers companies that can benefit from industry, sectoral and macroeconomic trends
• Aims at participating in high quality companies up to a reasonable price and hold them over an extended period of time
• Invests in stocks only after monitoring their trading volume to avoid liquidity risk

Invesco India Growth Opportunities Fund

• Aims to generate consistent outcomes in all market conditions without any sector or style bias
• Invests in a combination of growth and value stocks
• Undertakes bottom-up approach for stock selection while taking periodic top-down approach to manage risks
• Does not take cash calls; follows fully invested approach

Edelweiss Large n Midcap Fund

• Aims to deliver reasonable returns across market cycles
• Uses the combination of both growth and value investment styles
• Focuses on bottom up stock picking
• Invests in companies exhibiting strong growth and earning potential at reasonable valuations
• Follows a buy and hold approach
• Takes high active bets to generate alpha over the benchmark
• Keeps changing its Active Bet Allocation across market caps on changing market conditions and opportunities

Kotak Equity Opportunities Fund

• Invests across sectors based on the potential and performance of companies within those sectors
• Asset allocation and portfolio mix between large caps and midcaps is driven by overall macroeconomic situation
• Follows bottom-up investment approach

Tata Large n Midcap Fund

• Aims at proactively taking advantage of potential capital appreciation opportunities arising in large and midcap segment of the market
• Positioned as a “stock picker’s delight”, this fund undertakes rigorous research to identify investment opportunities like re-rating of turnaround stocks, companies benefiting from changing economic scenario, etc
• Follows bottom-up approach for stock picking
• Invests in fundamentally good stocks for medium to long term horizon
• Stock selection is based on criterion like sound professional management, past track record, industry scenario, liquidity of the securities, growth prospects, etc
• Prefers well managed and good quality companies with above average growth prospects

DSP Equity Opportunities Fund

• Follows an opportunistic investment approach with aggressive sectoral & stock positions to maximize fund performance
• Uses growth prospects, fundamentals and valuation to identify opportunities
• Uses a combination of top-down and bottom-up approaches for stock selection
• Open to adapt to changing market trends
• Usually prefers highly liquid stocks
• Constantly monitors price targets and future prospects for taking hold/sell decisions

ICICI Prudential Large n Midcap Fund 

• Follows a mix of top-down and bottom-up approach
• Top-down approach focuses on generating alpha through sectoral rotation
• Bottom up approach focuses on economic and business fundamentals to identify stocks with reasonable profitability, scalability and competitive advantages
• Adopts a counter-cyclical approach while selecting sectors
• Selects companies on the basis of
• fundamentals of the business
• industry structure
• management quality
• sensitivity to economic factors
• financial position of the company
• key earnings drivers

L&T Large and Midcap Fund

• Aims at delivering long term performance through high conviction ideas
• Strives to exploit stock market situations having the potential to deliver superior returns upon timely identification,careful analysis and holding for the right duration
• Follows bottom-up approach for stock selection aided by internal research
• Prefers companies offering the best value in terms of their long-term growth prospects, management quality and returns on capital
• Weightage of its stock composition may be different from its benchmark index

IDFC Core Equity

• Follows ‘Quality with valuation’ investment approach
• Invests in stocks of well managed sustainable businesses with reasonable valuation
• Uses three factor process to build its portfolio
• Looks for cash generating companies
• Looks for reasonable return on capital
• Looks for their debt repayment ability

Aditya Birla Sun Life Equity Advantage

• Follows a combination of top-down and with bottom-up approach of investing
• Adopts growth oriented investment style with aggressive diversified positioning
• Prefers companies with good corporate management and bright prospects for future growth
• Also prioritises past-performance of companies during stock selection
• Focuses on long-term fundamentally driven values but open to seizing short-term opportunities supported by underlying values
• Prefers investing in around 5-8 high growth sectors, depending upon the market phase

Pitfalls of investing in ‘Large and Midcap’ Funds

• Compulsory exposure of 35% of the total asset in midcap companies across all market conditions makes it riskier than large cap and multicap funds
• Lacks the flexibility of multicap funds to freely change their exposure to different market capitalisations according to changing market conditions

Who should invest in Large and Midcap Funds

• Investors seeking superior risk-adjusted returns than large cap funds and midcap funds
• Ideal for those seeking growth with stability
• Also suitable for those seeking exposure to both large and midcap stocks during all types of market conditions
• Investors should have an investment horizon of at least 5 years