Large-Cap, Mid-Cap and Small-Cap Funds Compared
Why in the news
Largecap funds recovered after a weak spell and moved past smallcap funds on two-year SIP returns, while midcap funds stayed ahead of both.
Key facts
- Two-year SIP return (annualised): midcap 12.6%, largecap 11.3%, smallcap 7.2%.
- Market capitalisation = current market price per share x total outstanding shares.
- Sebi groups companies into three bands by market cap, and funds follow the same labels.
The three categories
| Factor | Large-cap | Mid-cap | Small-cap |
|---|---|---|---|
| Rank by market cap | Top 100 | 101st-250th | 251st onwards |
| Market cap range | ₹20,000 crore and above | ₹5,000-20,000 crore | Below ₹5,000 crore |
| Risk / volatility | Low | Moderate / medium | High |
| Average 5-year return | ~7% | ~10.28% | ~14.74% |
| Liquidity | High | Medium | Low |
| Horizon | Short to medium | Medium to long | Long only |
| Suits | Conservative investors | Balanced investors | Aggressive, high risk tolerance |
Traits
- Large-caps: stable returns and blue-chip names such as Nifty 50 firms.
- Mid-caps: higher return potential than large-caps with moderate swings.
- Small-caps: highest risk owing to limited track record, but strong long-term growth potential.
Exam angle
- Classification of companies by market cap is done by Sebi.
- Rank bands: 1-100, 101-250, 251 and beyond.
- Highest-risk, lowest-liquidity category: small-cap.