Large & Mid Cap Mutual Funds

Large & mid cap funds are equity mutual funds that typically allocate their assets across large and mid cap companies. As per SEBI’s mutual fund categorisation rules, every Large & Mid Cap Fund must allocate:

• At least 35% of its total assets in large cap stocks (top 100 companies by market capitalisation)
• At least 35% in mid cap stocks (companies ranked 101st to 250th by market capitalisation)

Like other mutual funds, these funds pool capital from investors and invest it according to the fund's objective and the fund manager's stock selection. Once the strategy is set, the fund allocates at least 35% each to large cap companies and mid cap stocks. 

This means at least 70% of the fund’s assets will be invested in these companies. The remaining allocation is flexible, allowing fund managers to optimise the portfolio for prevailing market conditions.

• These funds are ideal for investors seeking a balance of the stability of large-cap companies and growth potential of mid-cap companies.

• As equity instruments, these funds carry moderate to high risk, making them best suited for investors with a higher risk appetite.

• Equities tend to deliver optimal returns over extended periods; these funds are well-suited for investors with a long-term investment horizon.

You can invest in a large & mid cap mutual fund by following the steps given below:

• Step 1: Log in to the Paisabazaar app using your registered mobile number.
• Step 2: Select the ‘Mutual Fund’ option on your dashboard.
• Step 3: Browse and choose the most suitable large & mid cap fund based on your goals and risk appetite.
• Step 4: Select the mode of investment - lump sum or SIP.
• Step 5: Enter the investment amount.
• Step 6: Complete your KYC verification to start investing.

Similar to equity mutual funds, even large & mid cap funds follow the same taxation rules (LTCG and STCG).

• Short-Term Capital Gains (STCG): If the holding period of the fund is less than 12 months, they are considered as STCG and taxed at 20% .
• Long-Term Capital Gains (LTCG): If the holding period of the fund is longer than 12 months, they are considered as LTCG. Gains up to ₹1.25 lakh are tax-exempt, and those exceeding this limit are taxed at 12.5%.

Dividends received from these funds are added to the investor’s income and taxed as per the applicable income tax slab.