Large & Mid Cap Mutual Funds offer investors an opportunity to create wealth by investing in an optimum mix of large-cap and mid-cap stocks, i.e., the leaders of today as well as the future leaders. Thus, investors benefit from the stability of large caps and the high growth potential of mid caps through a single fund.
This article will reveal the list of best Large & Mid Cap Mutual Funds for 2024. But first, here are some basic details about the category.
What are Large & Mid Cap Mutual Funds?
As per SEBI norms, Large & Mid Cap Mutual Funds are equity-oriented mutual funds mandated to invest a minimum of 35% of their assets each in equity and equity-related instruments of large-cap and mid-cap companies. In other words, these funds invest at least 70% of their assets in the top 250 companies in terms of market capitalisation.
Examples of Large & Mid Cap Mutual Funds in India
| Scheme Name | AUM (Rs Crore) |
| Mirae Asset Large & Midcap Fund | 30,284 |
| Canara Rob Emerg Equities Fund | 18,845 |
| SBI Large & Midcap Fund | 17,175 |
| Kotak Equity Opp Fund | 16,503 |
| HDFC Large and Mid Cap Fund | 13,428 |
| Axis Growth Opp Fund | 10,396 |
| DSP Equity Opportunities Fund | 9,645 |
| ICICI Pru Large & Mid Cap Fund | 9,637 |
| Sundaram Large and Mid Cap Fund | 5,738 |
| Tata Large & Mid Cap Fund | 5,712 |
The securities quoted are for illustration only and are not recommendatory.
AUM data as of November 30, 2023
(Source: ACE MF, data collated by PersonalFN)
The fund manager/s can decide where the remaining capital needs to be allocated based on how the market is performing or expected to perform. Most Large & Mid Cap Mutual Funds invest around 50-60% of their assets in large-cap stocks and 35-40% in mid-cap stocks.
What are the advantages of investing in Large & Mid Cap Mutual Funds?
A look at the historical market data suggests that performance across large caps and mid caps differs significantly over any given period — sometimes large caps outperform, while other times it could be mid caps. Hence, diversifying investment across large-cap and mid-cap stocks can generate better risk-adjusted returns compared to investing in just one market cap.
While large caps are known to provide stability across market cycles, their potential to generate very high returns is limited. On the other hand, mid caps can outpace large-cap returns over the long run, though they can be highly volatile in the short term.
Favourite stocks of Large & Mid Cap Mutual Funds
The securities quoted are for illustration only and are not recommendatory.
AUM data as of November 30, 2023
(Source: ACE MF, data collated by PersonalFN)
By investing in Large & Mid Cap Mutual Funds, investors can benefit from the steady return capability of large caps and the high growth potential of mid caps, at a reasonable degree of risk, provided they select the best funds in the category.
What are the risks involved in investing in Large & Mid Cap Mutual Funds?
Since Large & Mid Cap Mutual Funds invest in equities, they are vulnerable to market fluctuations. With predominant exposure to both large-cap and mid-cap stocks, these funds are riskier than pure Large Cap Funds but less risky than pure Mid Cap Funds as well as Multi Cap Funds, that invest across market capitalisation. This means Large & Mid Cap Funds can offer better returns than Large Cap Funds, albeit at a slightly higher risk.
Should investors consider investing in Large & Mid Cap Funds in 2024?
The Indian equity market displayed its strength and resilience in 2023 driven by robust macroeconomic indicators. This growth was driven by mid and small-cap stocks, which outperformed and gained significantly. Large-cap indices too made substantial progress, contributing to the overall market rally.
Going ahead, market experts are of the opinion that investors should keep their expectations lower from mid and small-cap stocks in 2024 due to expensive valuations. They believe that the positives are already priced in, and a large number of stocks are trading above their intrinsic value.
How the Indian equity market performed in the last one year
Base taken as 10,000
Data as of January 05, 2024
(Source: ACE MF, data collated by PersonalFN)
Having said that, India’s long-term growth story is intact and hence, long-term opportunities still exist across the Indian stocks market. So, while it is essential to exercise caution near market highs, it is prudent to maintain a balanced exposure across various market capitalisations to accomplish various financial goals. Large and Mid Cap Funds represent a distinct multi-cap investment strategy that allows investors to diversify their holdings among both large and mid-sized companies.
If the market corrects, the large-cap allocation can offer stability to the portfolio by limiting the downside risk. On the contrary, if the market keeps soaring despite the rising valuations, the mid-cap exposure can continue to reward investors with substantial gains.
Who should consider investing in Large & Mid Cap Mutual Funds?
Investors who are seeking the stability of large caps but do not want to miss out on the high-growth potential of mid caps, can consider adding Large & Mid Cap Fund to the ‘core’ part of their equity mutual fund portfolio. One should have a high risk appetite to bear the impact of short-term volatility, and a long-term investment horizon of at least 5 years.
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How are Large & Mid Cap Mutual Funds taxed?
Large & Mid Cap Mutual Funds are equity-oriented mutual funds and hence they follow equity taxation. The holding period for Large & Mid cap Mutual Funds from a tax perspective is 12 months. So, if investors sell their Large & Mid Cap Mutual Fund units before 12 months, the gains are subject to short-term capital gains (STCG) tax of 15%.
On the other hand, if they sell their Large & Mid Cap Mutual Fund units after completing one year, the gains are subject to long-term capital gains tax (LTCG) of 10%, but only if the gains exceed Rs 1 Lakh in a financial year.
Which are the best Large & Mid Cap Mutual Funds for 2024?
| Scheme Name | Absolute (%) | CAGR (%) | Ratio | ||||
| 1 Year | 3 Years | 5 Years | 7 Years | SD Annualised | Sharpe | Sortino | |
| HDFC Large and Mid Cap Fund | 19.99 | 29.78 | 15.93 | 15.12 | 15.66 | 0.41 | 0.90 |
| ICICI Pru Large & Mid Cap Fund | 18.15 | 29.65 | 16.00 | 15.86 | 14.56 | 0.42 | 0.93 |
| Quant Large & Mid Cap Fund | 16.86 | 28.57 | 17.48 | 16.68 | 16.97 | 0.37 | 0.78 |
| Category average | 14.93 | 24.82 | 14.75 | 15.22 | 14.95 | 0.33 | 0.68 |
| NIFTY LargeMidcap 250 – TRI | 15.12 | 25.89 | 14.61 | 15.91 | 15.23 | 0.33 | 0.69 |
Past performance is not an indicator for future returns
Data as of January 05, 2024. Direct plan – Growth option considered; Returns are on a rolling basis and in %
(Source: ACE MF, data collated by PersonalFN)
Let us now take a look at the three best Large & Mid Cap Mutual Funds for 2024:
Best Large & Mid Cap Fund for 2024 #1: HDFC Large & Mid Cap Fund
Launched way back in February 1994, HDFC Large & Mid Cap Fund was previously known as HDFC Large Cap Fund. Despite the fact that it is one of the oldest equity schemes in India, the past performance may not be comparable as the fund was originally a large-cap-oriented fund that invested over 90% of its assets in large-cap stocks. However, it was repositioned to the current Large & Mid Cap Fund mandate in 2018.
Historically, HDFC Large & Mid Cap Fund witnessed a prolonged phase of lacklustre growth which can be attributed to the change in its investment strategy as well as instability in the fund management team during that timeframe. However, the fund started recording turnaround performance in the latter half of 2020 when the equity market witnessed a broad-based rally. It now stands among the top performers in the Large & Mid Cap Fund category across time frames.
Fund Snapshot – HDFC Large & Mid Cap Fund
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Portfolio data as of November 30, 2023
Returns and NAV data as of January 05, 2024. Regular Plan – Growth Option considered
(Source: ACE MF, data collated by PersonalFN)
The fund follows a mix of ‘top-down’ and ‘bottom-up’ strategies for theme and stock selection. HDFC Large & Mid Cap Fund holds a large portfolio of over 150 stocks, which can be attributed to higher allocation to mid and small-caps and a steadily rising asset size. Moreover, the fund is cautious in its approach, which helps it mitigate the risk and perform well even during uncertain market phases.
Best Large & Mid Cap Fund for 2024 #2: ICICI Pru Large & Mid Cap Fund
Launched in July 1998, ICICI Pru Large & Mid Cap Fund is a high conviction driven Large & Mid Cap Fund that has established a track record of above-average performance across various time periods and delivered superior risk-adjusted returns.
The fund looks to identify high-growth potential stocks across sectors but with an eye on valuation. Notably, the fund showed a turnaround growth from 2021 onwards, outpacing the benchmark by a strong margin and topping the category returns, which has helped improve its returns across time frames.
Fund Snapshot – ICICI Pru Large & Mid Cap Fund
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Portfolio data as of November 30, 2023
Returns and NAV data as of January 05, 2024. Regular Plan – Growth Option considered
(Source: ACE MF, data collated by PersonalFN)
ICICI Pru Large & Mid Cap Fund follows a mix of bottom-up and top-down approach to pick stocks predominantly in the large-cap and mid-cap space. Being a sector-agnostic fund, the sectoral overweight/underweight position is decided based on the fund manager’s assessment and conviction on each sector.
While in the past ICICI Pru Large & Mid Cap Fund found it challenging to outperform during market rallies, the fund reversed this trend in the recent bull phase. Moreover, it has done well during bearish market phases and proven its ability to generate decent returns over complete market cycles. It has achieved this feat by smart sector selection and avoiding momentum bets.
Best Large & Mid Cap Fund for 2024 #3: Quant Large & Mid Cap Fund
Quant Large & Mid Cap Fund is a lesser-known growth-oriented Large & Mid Cap Fund that has demonstrated outstanding performance in recent years and rewarded investors with superior gains, albeit at a higher risk level.
Launched in December 2006, Quant Large & Mid Cap Fund is an agile scheme in the Large & Mid Cap Fund category that follows aggressive investment strategies. The fund registered extraordinary performance from 2020 to 2022, thereby rewarding its investors with remarkable gains. Though the volatility recorded by the fund is higher than the category average as well as the benchmark, its risk-adjusted returns are higher compared to the benchmark and some of its prominent peers.
Fund Snapshot – Quant Large & Mid Cap Fund
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Portfolio data as of November 30, 2023
Returns and NAV data as of January 05, 2024. Regular Plan – Growth Option considered
(Source: ACE MF, data collated by PersonalFN)
Quant Large & Mid Cap Fund adopts a quantitative approach to select high-growth stocks across sectors. This quantitative approach is based on the fund house’s proprietary VLRT framework, viz. Valuations, Liquidity, Risk, and Timing.
Despite witnessing bouts of underperformance in the short to medium term, the fund has created a satisfactory long-term track record. It stands out in terms of limiting the downside risk during bearish market phases, though it often struggles during bullish phases. The active investment approach and the ability to timely identify multi-bagger ideas has helped it to generate remarkable lead over the benchmark and its prominent peers.
This completes the list of the 3 best Large & Mid Cap Funds for 2024. Considering the rising valuations and uncertain global environment, it will be better to take the Systematic Investment Plan (SIP) route when investing in the best Large & Mid Cap Mutual Funds.
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Note: This write-up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully before investing.
This article first appeared on PersonalFN here
