Large Cap Funds
Large Cap Funds invest a minimum of 80% of their assets in equity shares of
large cap companies (Top 100 companies in terms of market capitalization).
They invest in well established companies with a proven track record. These
funds are capable of providing potentially reasonable returns and are
relatively less volatile compared to mid cap and small cap funds.
Mid Cap Funds
Mid Cap Funds invest a minimum of 65% of their assets in equity shares of mid
cap companies (101-250 companies in terms of market capitalization). They
are relatively more volatile than large cap funds but have the potential to
generate better returns than them.
Large and Mid Cap Funds
Large and Mid Cap Funds invest a minimum of 35% of their assets in both large
cap companies(Top 100 companies in terms of market capitalization) and mid
cap companies(101-250 companies in terms of market capitalization). The
remaining 30% of the assets can be invested in equities other than large and
mid cap and/or debt and money market instruments and such other securities
as may be permitted by SEBI.
Small Cap Funds
Small Cap Funds invest a minimum of 65% of their assets in equity shares of
small cap companies (251 and above companies in terms of market
capitalization). These funds have the potential to give reasonable returns
than large cap and mid cap funds but are also more volatile than them.
Multi Cap Funds*
Multi Cap funds invest in Large Cap, Mid Cap and Small Cap companies
according to the relevant market conditions. This gives the investors an
opportunity to invest in a diversified portfolio across market
capitalization.
*As per SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/172 dated September 11,2020,
Multi Cap funds have to invest a minimum of 25% in large cap, 25% in mid cap and 25%
in small cap companies w.e.f January,2021.
Equity funds that invest a minimum of 80% of assets in stocks of a particular
sector such as FMCG, Pharma, Technology, Banking & Financial Services etc.
come under sector funds. These funds allow a concentrated exposure to a
particular sector which can be beneficial to investors when a particular
sector is experiencing growth.
Thematic funds are mutual fund schemes which invest a minimum of 80% of its
assets in stocks revolving around a particular theme such as ESG
(Environmental, Social, Governance), Consumption, Equity Minimum Variance.
Thematic funds are considered to be more diversified than sector funds as
they can invest in multiple sectors based on a particular theme.
A focused equity fund invests a minimum of 65% of its assets in equity and
equity related instruments and invests in maximum 30 stocks across market
capitalization.
Contra fund follows a contrarian strategy of investment which invests a
minimum of 65% of its assets in equity and equity related instruments. This
fund invests in stocks which are currently out of favour with a belief that
over the long term, these stocks would gain value and perform better.
ELSS fund (Equity Linked Savings Scheme) is a scheme which allows tax
benefits upto ₹1,50,000 (For Individuals and HUF) under Section 80C of the
Income Tax Act. These funds provide opportunities for capital appreciation
along with tax benefits. It has a lock-in period of 3 years.
