Types of Equity Funds based upon Market Capitalisation
Large Cap Equity Funds: They primarily invest in companies with large market capitalisation, like Reliance Industries, TCS etc. These are mostly in the top 50 ranks of Nifty or top 30 in Sensex. These are the safest equity funds compared to small or mid-cap funds.
Mid-Cap Equity Funds: These funds invest in medium-sized companies, like Yes Bank, TVS Motors etc. They are riskier than large-cap funds but have a higher return potential over 3-5 years’ time.
Small-Cap Equity Funds: They invest in small companies (with a rank of 251st onwards). They are riskiest but have the potential to generate the highest returns. Investors usually invest for more than 5 years in these funds.
Multi-Cap Equity Funds: Fund manager can invest in companies with different market capitalisations, i.e., large, medium and small companies, depending upon his choice.
