What are large cap, mid cap and small cap funds?

Market capitalization or market cap is calculated by multiplying the number of shares of a company by the current market price of one share. Thus, a company with one lakh shares outstanding, selling at Rs. 100 per share, would carry a Rs.100 lakh market cap.

  • Large caps are described as the first 100 companies in terms of market capitalization. These are well established, stable companies with a steady performance and are usually recommended as a foundation for your investment portfolio.

  • Mid caps include companies from 101st till 250th in terms of market capitalization. These companies are larger and better established than small caps and hence could be less risky. Mid cap funds could be less vulnerable to market volatility and are generally recommended for investors who want superior returns without high risk.

  • Small caps are those companies after the 250th company in terms of market capitalization. These companies are not as established or financially stable as largecap companies could have significant growth potential. Mutual funds that invest in smallcap companies are called smallcap funds and tend to be volatile and highly risky. These funds are usually recommended for investors who seek aggressive growth and have an appetite for risk.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.