Large & Midcap category can drive stability and growth to your portfolio

New Delhi, October 9, 2023: Today’s investor has various Mutual Fund (MF) schemes in which he or she can invest in. The decision to invest in any MF scheme is based usually on the risk profile and on the individual’s financial goals.

SEBI has made several categorizations of equity mutual funds for the benefit of the investors for e.g. Large cap category, Mid-cap category, Small-cap category etc. Large & mid-cap category is fast emerging as a preferred option for those long term investors who want to grow their capital at steady pace albeit conservatively i.e. with stability.

What is a Large & mid-cap Category?

A Large & mid-cap category invests in both the large cap stocks and the mid-cap stocks. The top 250 stocks by market capitalization will be considered under this category for investment purpose. As per the mandate the fund manager is required to invest minimum 35% each in large cap and midcaps.

Why Invest in the Large & mid-cap category?

According to Chandraprakash Padiyar, Senior Fund Manager, Tata Asset Management, “Tata Large & Mid Cap Fund aims at proactively taking advantage of Potential Capital appreciation opportunities arising from large and midcap segment of the market. Positioned as a ‘stock picker’s delight’, the large & midcap fund undertakes rigorous research to identify opportunities in equity markets. The opportunities could be found in turnaround companies or in companies where the fundamentals are improving etc.

It invests in large and midcap stocks wherever the fund manager spots an opportunity. It is hence very actively managed and dynamic in nature, although stock picking is based on a sound bottom-up approach using Growth at Reasonable Price (GARP) investment philosophy. The GARP approach allows us to bet on high quality shares and at the same time ensures that the quality shares are bought at reasonable price. This approach seeks to combine the best facets of growth and value investing to select individual stocks. The whole idea while adopting GARP investment philosophy is to identify companies that are expected to deliver above-average revenue and earnings growth that are trading at a reasonable valuation.”

Benefits of investing in Large & Mid-cap category:

· Diversification: The riskiness or volatility may be reduced when you have your investments spread out in large caps and midcaps. This kind of diversification helps the fund manager to deliver higher risk adjusted returns over a long term.

· Stability: With their reliable financials and established presence large cap stocks may bring stability in the portfolio.

· Growth Potential: Mid cap stocks are usually high growth stocks and may offer higher potential returns.