What are large-midcap funds? | Types of Equity Mutual Fund

In this Investor Education series, we will learn about large-midcap fund.

Large-midcap is a relatively unknown category that invests in India's top 200 companies. At least 35% of their investment pool invests in large-cap and at least 35% in midcap stocks.

So you have the safety of large-cap and the growth opportunities of midcap. It's a perfect combination of stability and aggression.

Few things to keep in mind before investing in large-midcap funds:

1. Volatility
Large-midcap funds are less risky than midcap stocks, but that doesn't mean they are not volatile. Keep a time horizon of at least five years when investing in such funds.

2. Past performance
Before you zero in on a large-midcap fund, you should check the past performance of all available large-midcap funds. Along with absolute returns, one should also look at compounded annual growth rate (CAGR) of the fund. CAGR tells you how a fund has performed in the long term.

3. Expense ratio
Never invest in any fund without checking the expense ratio. The expense ratio tells you how much a fund house is charging you for the fund management. The expense ratio for large-midcap is usually between 1-2%. For some, it can also be more than 2%. So do compare the expense ratios of different funds.

4. Reputation
Check the reputation of fund house and the fund manager of the scheme.
The fund house should have a long-term track record of offering quality schemes, and the fund manager should be well-qualified and experienced.

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