Investing in large-cap funds versus midcap equity mutual funds

Equity mutual funds are differentiated into different types based on the market capitalisation of the stock into which the funds invest. The different categories are as follows –

  • Large cap funds which invest in stocks of large cap companies
  • Mid cap funds which invest in stocks of mid-cap companies
  • Small cap funds which invest in stocks of small cap companies
  • Multi cap funds which invest in a combination of large, mid and small cap stocks

Among the different types, large cap and mid-cap funds are quite popular because of their returns. But is investing in both the funds same?

No, it is not. 

Large-cap mutual fund in India is a fund that invests in the stocks of the most established companies of the market, companies which are in the top 100. Mid-cap funds, on the other hand, invest in companies which are in their growth and development stages and are not yet completely established in the market. Thus, the portfolio of both these funds differs greatly and so does the risk-return profile.

Here are some of the similarities and differences of investing in mid-cap and large-cap mutual fund in India –

Similarities 

  • Both funds are equity-oriented funds which are exposed to volatility risks
  • Under both the funds you can get attractive returns through equity exposure
  • Both the funds are exposed to equity taxation

Differences 

Besides these similarities, large-cap and mid-cap funds are quite different from one another. Here are the differences –

Differences 

Understand your investment preference and then select the top-performing large-cap fund or mid-cap fund to invest. Large-cap mutual fund in India is usually considered better as it invests in large and stable companies and hence offers stable returns. On that other hand, returns in a mid-cap fund are volatile. So, you need to choose accordingly. 

To find the top-performing large-cap funds you can visit etmoney.com. Etmoney.com is an online platform which allows easy mutual funds investment online in simple steps. You can visit etmoney.com and find every type of mutual fund scheme to build a diversified financial portfolio. So, understand the difference between large cap and mid cap funds and choose one or both for your portfolio. 

Published by Nidhi Mehra

I am blogger with 5 years of experience in writing articles and topics related to finance and funds

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