Large- and mid-cap mutual funds are equity funds that invest in a mix of large- and mid-cap companies. As per SEBI rules, they must allocate at least 35% of their assets to large-cap stocks and 35% to mid-cap stocks.

Large-cap companies are the top 100 firms by market capitalisation, known for stability, strong fundamentals, and a reliable performance history.

Mid-cap companies are smaller, growing firms with high return potential but greater volatility.

Investors should evaluate whether a mutual fund matches their needs before investing.

Large- and mid-cap funds suit those who want to benefit from mid-cap growth along with large-cap stability.

These funds carry moderate to high risk, making them suitable for investors with a higher risk appetite.

Since equity performs best over the long term, these funds are ideal for investors with a long-term investment horizon.

Risk Profile: Assess your risk tolerance before investing. Large caps offer stability, while mid caps are volatile, causing short-term fluctuations in large- and mid-cap fund performance and requiring higher risk tolerance.

Investment Goals: Identify your investment goals, time horizon, and investment approach to choose the right fund.

Fund Strategy and Allocation: These funds must invest 35% each in large- and mid-cap stocks, but allocation beyond this varies by fund. Understanding the fund’s strategy and asset mix is important.

Performance Track Record: Review the fund’s past performance, comparing it with peers and its benchmark.

Costs and Charges: Consider expense ratios, exit loads, and other fees, and compare them across funds as they impact overall returns.

Balanced Growth and Stability: Large-cap stocks provide stability, while mid-cap stocks offer higher growth potential, giving a balanced risk-return profile.

Diversification Across Market Segments: Investing across large- and mid-cap companies reduces over-concentration and spreads risk across sectors and industries.

Potential for Long-Term Wealth Creation: Large caps ensure steady growth, and mid caps can generate strong capital appreciation, making these funds suitable for long-term wealth building.

Market Volatility: Equity funds fluctuate with the market; mid-cap stocks are especially volatile and more affected by downturns.

Liquidity Risks: Mid-cap stocks are less liquid, making it challenging for fund managers to adjust portfolios during volatile periods.

Reliance on Fund Manager: Fund performance depends heavily on the manager's stock-picking and allocation decisions; poor choices can reduce returns.

Macroeconomic and Regulatory Risks: Economic changes, policy shifts, or sector disruptions can impact company performance and overall fund returns.

Large- and mid-cap mutual funds follow the same tax rules as equity mutual funds.

Selling units within one year results in short-term capital gains (STCG) taxed at 15% plus surcharge and cess.

Selling units after one year, with gains exceeding ₹1 lakh in a financial year, results in long-term capital gains (LTCG) taxed at 10% without indexation.

Dividends received are added to the investor's income and taxed according to their income tax slab.