Any wealth manager worth their salt would tell you that the large cap funds are the safest investment followed by mid-cap, and the small caps are among the most volatile, offering unpredictable returns.
But when it comes to returns, small and mid-cap can outpace their larger peers, although for a short duration. In the year 2023, something similar took place.
While large cap funds, on an average, delivered an annual return of 16.15 percent. Mid cap funds delivered a return of 30.77 percent, and small caps gave the maximum average return of 34.29 per cent.
It is vital to note that the large cap funds, despite offering muted returns, have drawn the maximum investment with total AUMs (assets under management) amounting to ₹2,76,639 crore. And the smallest asset size amounting to ₹2,20,176 crore belongs to small cap mutual funds (shows the table below).
|Mutual funds Schemes
|No. of schemes
|AUM ( ₹crore)
(Source: AMFI, data as on Nov 30, 2023)
We further examine the data to sort out the top performing five mutual funds in each of the three categories across market capitalisation: large cap, mid cap and small caps.
Large cap mutual funds
Large cap mutual funds refer to the mutual fund schemes which invest a minimum of 80 percent of their AUMs in large cap stocks. The large cap stocks are the stocks of top 100 companies, ranked according to their market capitalisation.
The average one-year return given by large cap mutual funds stood at 16.15 percent as on December 21, 2023, reveals the MorningStar data.
|Top performing large cap funds
|Nippon India Large Cap Fund
|Bank of India Bluechip Fund
|HDFC Top 100 Fund
|JM Large Cap Fund
|Invesco India Largecap Fund
(Source: AMFI; data as on Dec 21, 2023)
Mid Cap mutual funds
Mid cap mutual funds refer to the schemes which invest a minimum of 65 percent of their AUMs in large cap stocks. The mid cap stocks are the stocks of companies which are ranked between 101 to 250, as per market capitalisation.
The average one-year return for mid cap mutual funds stood at 30.77 percent, the MorningStar data shows.
|Top performing Mid cap funds
|Nippon India Growth Fund
|JM Midcap Fund
|Mahindra Manulife Mid Cap Fund
|HDFC Mid-Cap Opportunities Fund
|WhiteOak Capital Mid Cap Fund
Small Cap mutual funds
Small cap mutual funds refer to the schemes, which invest a minimum of 65 percent of their AUMs in small cap stocks. And the small cap stocks refer to the scrips of companies ranked lower than the top 250 companies, according to their market capitalisation.
The average one-year return for small cap mutual funds stood at 34.29 percent, the MorningStar data shows.
|Top performing small cap funds
|Mahindra Manulife Small Cap Fund
|Bandhan Small Cap Fund
|Franklin India Smaller Companies Fund
|ITI Small Cap Fund
|Quant Small Cap Fund
Investing in a fund is essentially a function of an investor’s long term financial goals. An investor should opt for it only if that investment aligns with those goals and falls within the broader contours of asset allocation.
For example, when an investor ‘X’ is expected to have an exposure of 30 percent to equity and he has already invested 34 percent of his portfolio in different equity schemes, then it is not advisable to invest any more money only because one particular scheme is offering high return.
So, we can state that the high returns offered by a scheme is certainly a key determinant for choosing it, but it should not be the only criterion.
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