Large-Cap, Mid-Cap, and Small-Cap Funds : Day 13
Investing in equity mutual funds often involves selecting from large-cap, mid-cap, and small-cap funds, which are defined based on the market capitalization of the companies they invest in. Each category offers unique risk-return dynamics, making them suitable for different types of investors.
In this blog, we’ll explore these three fund types in the Indian context, discussing their features, benefits, risks, and suitability to help you make an informed investment decision.
What Is Market Capitalization?
Market capitalization, or market cap, refers to the total value of a company’s outstanding shares. It is calculated as:
Market Cap = Share Price × Number of Outstanding Shares
Based on market capitalization, companies are categorized as:
Large-Cap: The top 100 companies by market cap.
Mid-Cap: Companies ranked 101 to 250.
Small-Cap: Companies ranked 251 and beyond.
This classification forms the basis for large-cap, mid-cap, and small-cap funds. Read more