Should you invest in large and midcaps through a single Large & Midcap MF scheme?

A large and midcap fund can provide a blend of stability of largecaps and growth potential of midcaps. It can provide higher returns with lower volatility.

Recently, 2 AMCs launched NFOs for their large and midcap funds. The Wealth Mutual Fund Company launched the Large and Midcap Fund NFO in the May-June period. The Trust Mutual Fund Large and Midcap NFO is open for subscription between 3rd and 17th July. The Abakkus Large and Midcap Fund NFO will be open for subscription between 15th and 29th July. Some AMCs already offer large and midcap schemes to their investors. So, why are AMCs launching schemes in this category? What does it offer investors, and should you invest in this scheme? We will find out in this article.

With the recent launch of new Large and Midcap Mutual Funds, investors are faced with a strategic choice. This article explores what these funds offer, their performance over the last decade, and provides insights on whether they are a sound investment option for long-term wealth creation. (iStock)

What is a Large and Midcap Scheme?

As per SEBI’s categorisation of mutual fund schemes, a Large and Midcap Scheme must invest a minimum of 35% of its total assets in equity and equity-related instruments of largecap companies and a minimum of 35% of its total assets in equity and equity-related instruments of midcap companies. The investment of the remaining 30% assets is at the fund manager’s discretion.

The largecap companies include India’s top 100 companies by market capitalisation. The midcap companies include India’s top 101st to 250th companies by market capitalisation. The Nifty LargeMidcap 250 Index represents all 250 large and midcap companies through a single index.

A large and midcap fund offers a blend of large and midcap companies. Large and midcap companies have their own benefits as follows.

The benefits of largecap companies include the following.

1. Most of these companies are well-established, mature businesses with a proven track record. They have scale, with most of them ranking either first or second in their sector.
2. Most largecap companies have a credible management that drives strategic decision-making and execution.
3. They offer better liquidity because their shares are traded more frequently with higher volumes.
4. They can raise capital at competitive rates for their growth and expansion.
5. Most of them have strong balance sheets that can support ongoing operations and withstand volatility during uncertain times.
6. During downturns, largecap companies are better able to navigate. Also, they recover faster when the cycle turns.

To summarise, largecaps provide stability, consistency and higher resilience during tough times.

On the other hand, the benefits of midcap companies include the following.

1. Most of them are emerging companies, growing fast, with the potential of becoming future market leaders.
2. These companies have less analyst coverage than largecap companies. Hence, some of these may be available for investment at relatively attractive valuations.
3. Most new-age companies or startups fall within the midcap and smallcap categories. These companies provide exposure to emerging themes, technologies, products, services, etc.
4. Due to their relatively smaller size than largecaps, they can adapt faster to a changing business environment.

To summarise, midcaps provide growth potential with the opportunity to participate in innovation.

Performance in the last decade

Let us see how the largecaps and midcaps have performed individually and together as part of one index in the last decade.

Calendar Year	Largecaps (Nifty 100 TRI)	Large and Midcap (Nifty LargeMidcap 250 TRI)	Midcaps (Nifty Midcap 150 TRI)
2016	4.7%	5.3%	5.5%
2017	32.8%	43.4%	54.4%
2018	3.4%	-4.7%	-12.5%
2019	11.4%	5.8%	0.6%
2020	16.0%	20.6%	25.1%
2021	26.0%	36.0%	46.5%
2022	3.4%	3.2%	2.8%
2023	20.7%	31.9%	43.6%
2024	12.9%	18.3%	23.8%
2025	9.8%	7.7%	5.5%
June 2026	-6.4%	-2.6%	1.2%

Source: Abakkus Large and Midcap Fund presentation

The above data is as of 15th June 2026.

The table shows how the large and midcap index has delivered balanced growth across cycles. The index has delivered higher returns than the largecap index with lower volatility than midcaps.

If an investor invested Rs. 10,000/month in 3 SIPs across each index, the returns would be as follows.

Source: https://www.abakkusmf.com/uploads/Presentation_Abakkus_Large_and_Mid_Cap_Fund_0bcc164613.pdf

Note: The data is as of 15th June 2026. The SIP is as on 1st of the month. The largecaps are represented by Nifty 100 TRI, large and midcaps by Nifty LargeMidcap 250 TRI, and midcaps by Nifty Midcap 150 TRI. The index performance does not signify the scheme performance. Past performance is not a guarantee of any future returns.

The value of the corpus accumulated under the large and midcap scheme SIP is Rs. 1.53 crores, with a 15% XIRR, which is a good return over a 21-year period.

Should you invest in a large and midcap scheme?

As of 15th June 2026, around 59% of the large and midcap stocks have corrected over 20% from their peak. So, many stocks are available at reasonable valuations, making them suitable for long-term investment. The largecap and midcap stocks cover almost 80% of the total market capitalisation, giving investors diversified exposure to 19 sectors of the economy through a single scheme.

The large and midcap scheme can be considered by an investor who:

1. Is investing with a long-term investment horizon of 5 years or above
2. Wants a diversified portfolio of 40-50 stocks with a blend of large and midcap stocks spread across 19 sectors of the economy, in a single scheme
3. Wants better risk-adjusted returns with a balance of higher growth with manageable volatility
4. Prefers active stock selection from large and midcaps by a professional fund manager and rebalancing as per market conditions

With a large and midcap fund, an investor can get the ideal combination of stability of largecaps with the growth potential of midcaps. Together, they can help an investor build a balanced path to long-term wealth creation.