What is the difference between Large Cap Fund & Mid Cap Fund?


  • Large Cap Funds are a relatively stable option and generate moderate returns
  • 5-year Return in Mid Cap Funds is more as compared to Large Cap Funds

Both, mid cap funds and large cap funds are types of equity schemes that invest major proportion of their corpus in equity and equity related instruments. According to the new mandate by SEBI, both of these mutual fund schemes have to invest atleast 80% of their corpus in equity and equity related securities. Apart from the fact that both are heavy on equity investments, there are no similarities. In fact, there are a grave number of differences that make each of them a unique avenue for the investor. Let’s have a look at the points of differentiation:

Market Capitalization: Market capitalization is the value of the company based on its share price and the total number of outstanding stocks. According to their market cap, companies are segregated as large cap, mid cap and small cap. Companies that have a market cap more that are in the top 100 category are called large cap companies. Whereas, mid cap companies are the companies ranked from 101 – 250 on the basis of their market capitalization. Thus, schemes that invest in the stocks of large cap are large cap mutual funds and the ones that invests in mid cap companies are mid cap funds.

Risk: The stocks of mid cap companies are fairly stable because they are mostly well established companies which has grown over the years and are fully mature. On the contrary, mid cap companies are new in the business, so it’s difficult to predict their growth. Thus, mid cap funds are extremely volatile and can bring huge losses to the investor in bearish markets. There’s moderate risk involved in large cap funds as these funds do not take a huge blow even during market lows.

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Returns: With high risk comes high returns. Mid cap mutual funds can bring the investor exceptional returns when the market is at its peak. Whereas, a large cap fund investor won’t be able to generate returns as high as mid cap funds. Aggressive investors who want to earn high returns are recommended to invest in mid cap funds. If you’re a cautious investor who has a moderate risk appetite and wants stable returns, large cap fund is your avenue.

Recommended Large Cap Fund & Mid Cap Fund

Fund Name Riskometer1-year Return3-year Return5-year return 
Reliance Large Cap FundHigh-5.13%8.42%9.87%
ICICI Prudential Bluechip FundModerately High-4.73%7.87%9.23%
Mirae Asset Large Cap FundModerately High-1.70%10.46%12.27%
Fund Name Riskometer1-year Return3-year Return5-year return 
Franklin India Prima FundModerately High-9.33%4.80%12.00%
DSP Midcap FundModerately High-9.21%5.82%12.91%
Axis Midcap FundModerately High-4.48%10.30%12.12%

Note: All the data that has been mentioned in this articleis sourced from Value Research as on Aug 13, 2019. Return Data is in relation to Regular Plan.

Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing.

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