Large & Mid Cap Mutual Funds

In 2025, the Indian stock market experienced an unprecedented uptrend. The Sensex surpassed 84,000, and the Nifty 50 was nearing 25,000, thanks to strong earnings, macroeconomic stability, and continued retail inflows into mutual funds. Under these circumstances, significant- and mid-cap funds have become the favorites of investors seeking a balanced exposure.

Diversification involves combining large, stable companies with high-growth mid-cap stocks. This mix reduces risk and can potentially increase returns.

• SEBI-Mandated Allocation: The 35%-35% rule ensures these funds cannot be completely biased towards safe or risky stocks. This makes them naturally balanced and perfect for investors with a moderate risk appetite.
• Active Management: Fund managers actively rebalance portfolios based on valuations, earnings, sector performance, and market cycles, offering dynamic exposure to growing sectors such as banking, FMCG, IT, pharmaceuticals, and infrastructure.

Advantages:

• Better return potential than large-cap funds alone.
• Lower volatility than mid- or small-cap funds.
• Ideal for medium to long-term wealth creation (5+ years).
• Can outperform during both bull and bear markets.

• Still subject to market volatility, particularly from mid-cap companies.
• Performance heavily depends on the manager's ability to pick stocks.
• Not ideal for short-term goals or risk-averse investors.

• Large Caps: Established giants like Reliance, TCS, Infosys, HDFC Bank.
• Mid Caps: Growth-focused companies like Zomato, Tube Investments, Trent, L&T Finance, or Bharat Forge.

Some funds may tilt their mid-cap portion toward high-conviction picks to boost alpha, while others remain conservative with well-diversified baskets.

Large & Mid Cap Funds are best for:

• First-time equity investors seeking a mix of stability and growth.
• Moderate-risk investors seeking long-term wealth creation.
• SIP investors looking to ride out market cycles.
• Those seeking a core holding for a long-term mutual fund portfolio.

If you're building a portfolio, pairing a Large and Mid Cap Fund with a Flexi Cap Fund or a Debt Fund can provide an effective core-satellite strategy, balancing growth with risk mitigation.

Same as other equity mutual funds:

• Short-term capital gains (STCG) (holding < 1 year): 15% tax
• Long-term capital gains (LTCG) (holding > 1 year): 10% tax on gains exceeding ₹1 lakh/year
• Dividends: Taxed as per investor's income slab; TDS applicable beyond ₹5,000/year

• Retail inflows into equity funds reached a record ₹22,726 crore in May 2025, with significant allocations toward large- and mid-cap categories, as well as the flexi-cap category.
• SIP accounts have crossed eight crore active users, and large and mid-cap funds are among the top three preferred categories.
• Mirae Asset Large & Midcap Fund remains one of the most recommended funds by wealth advisors for its consistent alpha generation.