Stock market is broadly divided on basis of market capitalization as among large cap, mid cap, and small cap. Market capitalization is calculated by multiplication of the number of outstanding shares company offered with the current market price of one share. Mutual funds that invest in the stock markets are called equity mutual funds.

There are 4 types of equity oriented mutual funds depending on market capitalization. These are :

Large Cap Funds:  Large cap are big, well-established companies of the equity market. These companies are strong, reputainvestsd trustworthy. Large-cap companies generally are top 100 companies in a market. When mutual funds invest their capital in large-cap companies then these funds are called Large Cap equity funds.

Mid Cap Funds: Here, the mutual fund invest in stocks of mid-size companies. Mid-caps are compact companies of the equity market, falling somewhere between small and large cap companies and are 100-250 companies in a market afterlarge-cap companies.

Small Cap Funds: In these types of funds, fund manager invests major portion of the investors’ money in stocks of small cap companies. Small cap are small companies of stock market and are all the companies apart from large and mid cap companies in a market .

Multi Cap Funds : These funds are used to minimize the risk and diversify the investment. In these funds, capital is invested in companies across different sectors and of different capitalization.

Things to Remember

Don’t just run for returns from investment for investing in Mutual Funds. There lot of things you should look into before selecting a fund which will match your investment goals. Following the 3 things you should always remember before investing in Mutual Funds :

  • Higher rates : don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.
  • Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.
  • Review your investment from time to time but not too often. Once a few weeks is good enough.

To ensure that the fund is in good hands, choose a fund house having fund manager with good amount of experience managing small/mid cap funds and associated with these funds for some good numbers of years.

Here are some camparisons to show you how large-cap funds differ from small-cap funds.

Comparision: SBI Bluechip Fund vs SBI Small & Midcap Fund

SBI Bluechip Fund

This is a Large Cap Equity Oriented Mutual Fund launched in February 14, 2006. It is a fund with moderately high risk and have given a return of 11.69 % since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  17.20 %
3 years  9.89 %
5 years 18.57 %

Performance of the fund since 2008 :

Here’s the key features of SBI Bluechip Fund :

  • This fund has been rated as a 4-star fund by Groww and ranked 2 in large cap fund category by Crisil.
  • AUM of close to ₹ 16480 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark BSE S&P 100 since its launch.
  • The top portfolio holdings of the fund include SBI, HDFC Bank Ltd., ITC, Mahindra & Mahindra Ltd., HPCL, Hero MotoCorp Ltd., IndusInd Bank Ltd.,Larsen & Toubro Ltd., CBLO ( CCIL ) etc.
  • The holdings are balanced across various sectors with maximum weightage given to financial services ( 35 % ) followed by Automobile ( 11.6 % ) and Consumer Goods ( 9.9 % ).

  • Minimum SIP = ₹ 500
  • Equity share = 91.3 % , Debt share = 0.7 % and Cash = 7.9 %

  • Large Cap share= 86 % , Mid Cap share = 14 % and Small Cap share = 0 %

This fund is one of the most popular large cap fund available in market. But, returns from this large cap fund is lesser as compared to other popular fund in this category.

So, if you are thinking of investing a lump sum amount or for longer duration, this large cap fund is just the perfect choice for you.

Large cap funds may give you good returns on your lump sum investment over the long term. The companies in the large cap funds portfolio are steady compounders and pay dividend on regular basis.

SBI Small & Midcap Fund

This is a Small Cap Equity Oriented Mutual Fund launched in September 09, 2009. It is a fund with high risk and have given a return of 23.25 % since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  49.36 %
3 years  25.37 %
5 years  35.57 %

Performance of the fund since 2008 :

Here’s the key features of SBI Small & Midcap Fund :

  • This fund has been rated as a 4 star fund by Groww.
  • AUM of close to ₹ 943 Cr.
  • Age is nearly 8 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark S&P BSE Small Cap since its launch.
  • The top portfolio holdings of the fund include Westlife Development Ltd., Kirloskar Oil Engines Ltd., LT Foods Ltd., Relaxo Footwear, Elgi Equipments Ltd., Tamil Nadu Newsprint & Papers Ltd., Hawkins Cooker Ltd. etc.
  • The holdings are balanced across various sectors with maximum weightage given to Consumer Goods ( 23.7 % ) followed by Industrial Manufacturing ( 17.8 % ) and Services ( 14 % ).

  • Minimum SIP = ₹ 1000
  • Equity share = 95.4 % , Debt share = 0.5 % and Cash = 4.1 %

  • Large Cap share= 0 % , Mid Cap share = 43.3 % and Small Cap share = 56.7 %

This funds have exponential growth potential and give high returns on investment and is best suited for investors with high risk appetite or for seasoned investors. Also, this best for investors who have very good ideas of mutual funds and the risks associates with them. Associated with this fund for some good numbers of years for getting benefit of its high return on investment.

Comparision: Mirae Asset India Opportunities Fund vs Mirae Asset Emerging Bluechip Fund

Mirae Asset India Opportunities Fund

This is a Large Cap Equity Oriented Mutual Fund launched in April 04, 2008. It is a fund with moderately high risk and have given a return of 16.88 % since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  22.13 %
3 years  12.32 %
5 years  21.54 %

Performance of the fund since 2008 :

Here’s the key features of Mirae Asset India Opportunities Fund :

  • This fund has been rated as a 5 star fund by Groww.
  • AUM of close to ₹ 6123 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark S&P BSE 200 Fund since its launch.
  • The top portfolio holdings of the fund include ICICI Bank Ltd., HDFC Bank Ltd., Larsen & Toubro Ltd., Reliance Industries Ltd., SBI, Infosys Ltd., Maruti Suzuki India Ltd., Kotak Mahindra Bank Ltd., Grasim Industries Ltd. etc.
  • The holdings are balanced across various sectors with maximum weightage given to the Financial Services ( 35.4 % ) followed by Automobile ( 10.3 % ) and Consumer Goods ( 9.6 % ).

  • Minimum SIP = ₹ 1000
  • Equity share = 97 % , Debt share = 0.2 % and Cash = 2.8 %

  • Large Cap share= 84.9 % , Mid Cap share = 15.1 % and Small Cap share = 0 %

This fund is one of the best large cap fund available in market. Associate with this fund, if you are thinking of investing a lump sum amount or for longer duration. Large cap funds may give you good returns on your lump sum investment over the long term. The companies in the large cap funds portfolio are steady compounders and pay dividend on regular basis.

Mirae Asset Emerging Bluechip Fund

This is a  Mid Cap Equity Oriented Mutual Fund launched in July 9, 2010. It is a fund with moderately high risk and has given a return of 23.40 % since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  23.72 %
3 years  19.47 %
5 years  30.77 %

Performance of the fund since 2008 :

Here’s the key features Mirae Asset Emerging Bluechip Fund :

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 5364 Cr.
  • Age is nearly 7 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark Nifty Free Float Midcap 100 since its launch.
  • The top portfolio holdings of the fund include Tata Global Beverages Ltd., ICICI Bank Ltd., Kotak Mahindra Bank Ltd., Raymond Ltd., HDFC Bank Ltd., Federal Bank Ltd., Info Edge Ltd., IndusInd Bank Ltd., Ceat Ltd. etc.
  • The holdings are balanced across various sectors with maximum weightage given to Financial Services ( 25.9 % ) followed by Consumer Goods ( 12.8 % )

  • Minimum SIP = ₹ 1000
  • Equity share = 98.8 % , Debt share = 0.1 % and Cash = 1.1 %

  • Large Cap share = 36.8 % , Mid Cap share = 57.6 % and Small Cap share = 5.6%.

This is one of the best performing Multi cap fund available in market right now. This is a diversified fund with holding in companies of different market capitalization.

Multi-cap funds are risky as compared to large cap funds and depend a lot on the ability of fund manager. Associated with this fund for some good numbers of years for getting benefit of its high return on investment.

Comparision: Reliance Top 200 Fund vs Reliance Small Cap Fund

Reliance Top 200 Fund

This is a Large Cap Equity Oriented Mutual Fund launched in August 08, 2007. It is a fund with moderately high risk and have given a return of 11.89 % since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  22.94 %
3 years  10.41 %
5 years 18.77 %

Performance of the fund since 2008 :

Here’s the key features of Reliance Top 200 Fund :

  • This fund has been rated as a 5 star fund by Groww.
  • AUM of close to ₹ 4149 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark S&P BSE 200 Fund since its launch.
  • The top portfolio holdings of the fund include Divis Laboratories Ltd., HDFC Bank Ltd., Larsen & Toubro Ltd., IOCL, SBI, Infosys Ltd., ITC Ltd., Tata Steel Ltd., Axis Bank Ltd. etc.
  • The holdings are balanced across various sectors with maximum weightage given to the Financial Services ( 32.3 % ) followed by Energy ( 10.3 %).

  • Minimum SIP = ₹ 100
  • Equity share = 95.3 % , Debt share = 0.2 % and Cash = 4.5 %

  • Large Cap share= 84.6 % , Mid Cap share = 15.4 % and Small Cap share = 0 %

This fund is one of the best large cap fund available in market. So, if you are thinking of investing a lump sum amount or for longer duration, this large cap fund is just the perfect choice for you. Large cap funds may give you good returns on your lump sum investment over the long term. The companies in the large cap funds portfolio are steady compounders and pay dividend on regular basis.

Reliance Small Cap Fund

This is a Small Cap Equity Oriented Mutual Fund launched on September 16, 2010. It is a fund with high risk and has given a return of 22.74 % since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  41.17 %
3 years  22.64 %
5 years  35.57 %

Performance of the fund since 2008 :

Here’s the key features of Reliance Small Cap Fund :

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 6371 Cr.
  • Age is nearly 7 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark S&P BSE Small Cap since its launch.
  • The top portfolio holdings of the fund include Navin Fluorine International Ltd., Deepak Nitrite Ltd., Aditya Birla Finance Ltd. ( 91D ), V I P Industries Ltd., RBL Bank Ltd., Cyient Ltd., CBLO ( CCIL ) etc.
  • The holdings are balanced across various sectors with maximum weightage given to Consumer Goods ( 21.7 % ) followed by Industrial Manufacturing ( 15.1 % )

  • Minimum SIP = ₹ 100
  • Equity share = 93 % , Debt share = 0 % and Cash = 7 %

  • Large Cap share = 5.4 % , Mid Cap share = 46.4 % and Small Cap share = 48%

This funds have exponential growth potential and give high returns on investment and is best suited for investors with high risk appetite or for seasoned investors.

Also, this best for investors who have very good ideas of mutual funds and the risks associates with them. Associated with this fund for some good numbers of years for getting benefit of its high return on investment.

Conclusion

In all comparisons between large cap fund and small cap fund for the same fund house done above shows that small cap funds gives very high returns as compared to large cap funds for 1 Y, 3 Y and 5 Y duration. But also we have seen that the risk associated with small cap funds are very high as compared to large cap funds.

Thinking of investing in an equity mutual fund, it is very crucial to decide the most appropriate market capitalization to choose the fund from – i.e. among large cap, mid cap, small cap, sectoral cap or multi-cap fund category. Each category of market capitalization categories has its own advantages.

 

To look at some of the best performing funds from every category of mutual funds, check out Groww 30 best mutual funds to invest in 2018.

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.