10 Best Large & Midcap Funds to Invest in 2020

What are ‘Large and Midcap’ funds?

Large and midcap funds are open-ended equity mutual funds, which have to invest at least 35% of their total assets in both large cap and midcap companies. According to the SEBI regulations, large cap companies are those ranked 1st-100th in terms of full market capitalisation whereas mid cap companies are those ranked from 101st to 250th in terms of full market capitalisation. 

Why invest in ‘large and midcap’ funds?

  • Ideal fund category for those seeking growth with stability
  • Exposure to large cap stocks offers stability and reduces volatility
  • Exposure to midcap stocks enhances growth prospects
  • Blended portfolios may give relatively superior risk-adjusted performance than large cap funds and mid cap funds
  • Can strengthen the core of your equity portfolio to help to achieve long term financial goals

Table of Best Large and Midcap Funds for 2020:

(Data as on July 8, 2020 : Source: Value Research) 

Investment Strategies of Best ‘Large and Midcap’ Funds

Mirae Asset Emerging Bluechip Fund

  • Invest in emerging companies that have the potential to be future’s bluechip companies
  • Follows bottom-up investment approach driven by value investing in growth oriented businesses
  • Prefers companies that can benefit from industry, sectoral and macroeconomic trends
  • Aims at participating in high quality companies up to a reasonable price and hold them over an extended period of time
  • Invests in stocks only after monitoring their trading volume to avoid liquidity risk

Invesco India Growth Opportunities Fund

  • Aims to generate consistent outcomes in all market conditions without any sector or style bias
  • Invests in a combination of growth and value stocks
  • Undertakes bottom-up approach for stock selection while taking periodic top-down approach to manage risks
  • Does not take cash calls; follows fully invested approach

Edelweiss Large n Midcap Fund

  • Aims to deliver reasonable returns across market cycles
  • Uses the combination of both growth and value investment styles
  • Focuses on bottom up stock picking
  • Invests in companies exhibiting strong growth and earning potential at reasonable valuations
  • Follows a buy and hold approach
  • Takes high active bets to generate alpha over the benchmark
  • Keeps changing its Active Bet Allocation across market caps on changing market conditions and opportunities

Kotak Equity Opportunities Fund

  • Invests across sectors based on the potential and performance of companies within those sectors
  • Asset allocation and portfolio mix between large caps and midcaps is driven by overall macroeconomic situation
  • Follows bottom-up investment approach

Tata Large n Midcap Fund

  • Aims at proactively taking advantage of potential capital appreciation opportunities arising in large and midcap segment of the market
  • Positioned as a “stock picker’s delight”, this fund undertakes rigorous research to identify investment opportunities like re-rating of turnaround stocks, companies benefiting from changing economic scenario, etc
  • Follows bottom-up approach for stock picking
  • Invests in fundamentally good stocks for medium to long term horizon
  • Stock selection is based on criterion like sound professional management, past track record, industry scenario, liquidity of the securities, growth prospects, etc
  • Prefers well managed and good quality companies with above average growth prospects

DSP Equity Opportunities Fund

  • Follows an opportunistic investment approach with aggressive sectoral & stock positions to maximize fund performance
  • Uses growth prospects, fundamentals and valuation to identify opportunities
  • Uses a combination of top-down and bottom-up approaches for stock selection
  • Open to adapt to changing market trends
  • Usually prefers highly liquid stocks
  • Constantly monitors price targets and future prospects for taking hold/sell decisions

ICICI Prudential Large n Midcap Fund 

  • Follows a mix of top-down and bottom-up approach
  • Top-down approach focuses on generating alpha through sectoral rotation
  • Bottom up approach focuses on economic and business fundamentals to identify stocks with reasonable profitability, scalability and competitive advantages
  • Adopts a counter-cyclical approach while selecting sectors
  • Selects companies on the basis of
  • fundamentals of the business
  • industry structure
  • management quality
  • sensitivity to economic factors
  • financial position of the company
  • key earnings drivers

L&T Large and Midcap Fund

  • Aims at delivering long term performance through high conviction ideas
  • Strives to exploit stock market situations having the potential to deliver superior returns upon timely identification,careful analysis and holding for the right duration
  • Follows bottom-up approach for stock selection aided by internal research
  • Prefers companies offering the best value in terms of their long-term growth prospects, management quality and returns on capital
  • Weightage of its stock composition may be different from its benchmark index

IDFC Core Equity

  • Follows ‘Quality with valuation’ investment approach
  • Invests in stocks of well managed sustainable businesses with reasonable valuation
  • Uses three factor process to build its portfolio
  • Looks for cash generating companies
  • Looks for reasonable return on capital
  • Looks for their debt repayment ability

Aditya Birla Sun Life Equity Advantage

  • Follows a combination of top-down and with bottom-up approach of investing
  • Adopts growth oriented investment style with aggressive diversified positioning
  • Prefers companies with good corporate management and bright prospects for future growth
  • Also prioritises past-performance of companies during stock selection
  • Focuses on long-term fundamentally driven values but open to seizing short-term opportunities supported by underlying values
  • Prefers investing in around 5-8 high growth sectors, depending upon the market phase

Pitfalls of investing in ‘Large and Midcap’ Funds

  • Compulsory exposure of 35% of the total asset in midcap companies across all market conditions makes it riskier than large cap and multicap funds
  • Lacks the flexibility of multicap funds to freely change their exposure to different market capitalisations according to changing market conditions

Who should invest in Large and Midcap Funds

  • Investors seeking superior risk-adjusted returns than large cap funds and midcap funds
  • Ideal for those seeking growth with stability
  • Also suitable for those seeking exposure to both large and midcap stocks during all types of market conditions
  • Investors should have an investment horizon of at least 5 years

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