Large & Mid-cap Mutual Funds

One of the easiest ways to gain exposure to the growth of the stock market is to invest in mutual funds. Large & Mid-Cap Mutual Funds can be a good choice if you are looking for a mix of safety and growth. These mutual funds benefit from both established firms and emerging firms.

What are Large & Mid-Cap Funds?

Large & Mid Cap Mutual Funds are equity mutual funds that invest in both large-cap as well as mid-cap equities. According to regulatory guidelines, Large & Mid Cap Mutual Funds make a minimum investment of 35% in large cap equities and also invest not less than 35% in mid cap equities.

Large cap equities are leading companies with an established reputation in the business field. On the contrary, mid-cap equities are companies that hold the potential to become future leaders in the respective industries. In simple terms, large cap equities are safe investments while mid cap equities are highly rewarding and profitable.

Features of Large & Mid-Cap Funds

• Portfolio Diversity: This portfolio invests in large-cap as well as mid-cap stocks, limiting risks from concentrating on one stock group.
• Potential for Growth: Inclusion of mid-cap stocks enables you to earn money from the growth of new enterprises.
• Stability: Investments in large-cap stocks ensure relative stability and insulate you from market fluctuations.
• Professional Fund Management: Experienced fund managers make informed decisions regarding investments made.
• Favorable for Long-Term Investment: These funds are meant for those who invest in the markets for a period of five years or more.

How to Invest in Large & Mid-Cap Mutual Funds?

You can invest in large & mid-cap funds by following simple process:

Step 1: Choose investment mode. You can invest through:

• AMC websites
• Online investment platforms provided by stockbrokers
• Mutual fund distributors

Step 2: Choose a suitable large & mid-cap fund.

Step 3: Choose between Systematic Investment Plan (SIP) and Lump sum based on your goal and make investment.

Step 4: Make payment through UPI, netbanking or other available methods.

Why Invest in Large & Mid Cap Mutual Funds?

• Balanced Risk and Growth Potential: Large cap companies give stability whereas mid cap companies provide higher growth potential. This ensures that one makes an optimum portfolio by combining both.
• Wealth Accumulation Over Time: Equities have provided returns more than the rate of inflation over long time periods. These funds help investors capitalize on such growth potential.
• Diversified Investments: Investment across different sized companies helps reduce risks and dependence on a particular sector of the market.
• Perfect For Long-Term Investing: Such funds can be good investments for those looking at long-term investing for purposes like retirement planning, education funds or other reasons.

Taxation Rules for Large & Mid Cap Mutual Funds

Large & Mid Cap mutual funds fall into the category of equity mutual funds as they invest in companies of different sizes. Hence, focussed funds are subject to the laws for equity mutual fund taxation.

• Short-Term Capital Gains (STCG): If units are sold within 12 months from the date of purchase, the profits will be considered STCG, which shall be taxed at 20%, with applicable surcharge and cess.
• Long-Term Capital Gains (LTCG): Profits made from selling units after 12 months will be considered LTCG. Profits made from these funds beyond ₹1.25 lakh in a fiscal year will be taxed at 12.5%, whereas LTCG up to ₹1.25 lakh is tax-exempt.