
Risks, Rewards and Large & Mid-Cap Funds
I once met a later investment life-cycle stage couple who wanted to invest one-third of their portfolio in equity mutual funds. They informed me that thus far they had always invested directly in shares and inspite of following every 'Rule' of Investing they had read of in 'best-selling' investment books, had ended up losing more often than gaining.
They told me that they bought only blue-chip stocks. On studying their portfolio, I found that for them blue-chip meant familiar 'brand-names'. Now some of these worthies fell in the small-cap category as defined by SEBI. I felt that ideally, someone in the investment life-cycle stage of wealth consolidation they were would have been better served by building their equity portfolio component around the category of Large and Mid-Cap Funds. These funds were introduced as a separate category of Equity Funds by SEBI in October 2017. As opposed to a pure large cap fund or a mid cap fund, these funds have the leeway to diversify their investments across a single fund.
A Large and Mid Cap Fund, by definition is a type of equity fund that invests at least 35%of its AUM in large cap stocks and another 35%in mid cap stocks with leeway to invest more thereafter in either category as well as in debt and money market instruments. As it is a pure equity fund, one must have a long term investment horizon while investing in this category, since like all pure equity funds, its risk multiplies if targeted for short term investments.
Like other Equity funds, this category too is taxed at the rate of 12.5% for Long Term Capital Gains (LTCG) made on the sale of units priced at over R1.25 lakh, and 20% for Short Term Capital Gains (STCG) if the units are sold within the time period of 1 year from the date of allotment
These funds which effectively invest in the top 250 listed companies in terms of market capitalisation have the combined features of Large Cap and Mid Cap Funds which offer relatively better stability, balance of risk and potential for reasonable returns in the long term.
With a comparatively more limited universe of stocks to select from as compared to Flexi-cap or Multi-Cap funds that have the mandate to invest across market capitalisations, the onus remains on beating the benchmark index. That quite a few of them have managed to do so over multiple time frames suggests that there could be a case for Active over Passive funds in the Indian market, for longer than originally anticipated.
In the meanwhile, the couple I mentioned at the start of this column woke up to the categorisation of funds by SEBI and how it can be used to determine their risk-reward ratio. Their investment journey would hopefully have been be a lot smoother and more profitable too, thereon.
(Ashok Kumar heads LKW India. The views expressed here are his own)

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Time of India
32 minutes ago
- Time of India
RCB to be sold after historic IPL 2025 win? Owner Diageo breaks silence
Image credit: BCCI/IPL Diageo India, the Indian branch of UK-based Diageo Plc and owner of the Royal Challengers Bengaluru (RCB) IPL franchise, has firmly rejected rumors of selling the team. In a letter addressed to the Bombay Stock Exchange (BSE) and its Surveillance Department on Tuesday, June 10, a Diageo India representative stated that the media reports suggesting a potential sale are purely speculative. "The company would like to clarify that the aforesaid media reports are speculative in nature and it is not pursuing any such discussion," Mital Sanghvi, the company secretary, informed the regulating body of the Indian Stock Market. "This is for your information and records." Go Beyond The Boundary with our YouTube channel. SUBSCRIBE NOW! According to a Cricbuzz report, Diageo's statement was in response to a query from the Bombay Stock Exchange (BSE), where the company is publicly listed. Since speculation about a possible sale of the RCB franchise began circulating, shares of United Spirits — the Diageo-owned company that holds RCB — have seen a notable uptick. On Tuesday, Bloomberg reported that Diageo is considering selling the RCB franchise. The report surfaced shortly after RCB's maiden IPL title win on June 3 — a milestone achieved after 17 years — followed tragically by an incident in Bengaluru on June 4, where celebrations turned fatal, leaving 11 dead and many injured. Virat Kohli's love for 'dhaba' food, priority for family & more | RCB bus driver shares stories Though Diageo officially dismissed the sale reports as "speculative," the ambiguity of their statement has sparked deeper speculation. A seasoned voice in India's sports business ecosystem suggested that 'being a public company, there will be a lot of pressure on reputational damage,' hinting that Diageo could be weighing its options more seriously than publicly admitted. There are also murmurs about Diageo valuing the RCB franchise at around USD 2 billion. While some industry insiders view that figure as inflated — especially when compared to Torrent's acquisition of Gujarat Titans at approximately INR 7500 crore (around USD 1 billion) — others disagree. Lalit Modi , the architect of the IPL, told Cricbuzz that a USD 2 billion valuation for RCB is quite realistic. 'A particularly special feeling': Andy Flower hails Virat Kohli, RCB after historic title win "I will not be surprised if it is sold for a higher price," he remarked, adding that comparing the RCB valuation to that of the newer Gujarat franchise isn't an apples-to-apples comparison. "I will not be surprised if it is sold for a higher price," he said , stating that the valuation of GT cannot be compared here since it was a one-year-old deal. The sale report remains speculative, as clarified by the Diageo official in the response to the BSE. "No decision is final and they may decide against selling the team, the people said, asking not to be named as the details are private," the Bloomberg report says.


Time of India
35 minutes ago
- Time of India
Tier-III cities drive 62% of new insurance premiums: Report
HighlightsA recent report from Probus, an InsurTech and insurance broking firm, reveals that Tier-III cities and smaller towns are now responsible for approximately 62 per cent of new insurance premiums in India for the current fiscal year. The motor insurance segment experienced significant growth of 25.6 per cent in fiscal year 2024-25, driven by increased awareness, digital access, and an expanded Point-of-Sale Person network. Fresh life insurance policies saw a growth exceeding 60 percent in fiscal year 2024-25 compared to the previous year, while Small and Medium Enterprise insurance emerged as the fastest-growing segment with 112 percent increase. A new report from Probus, an InsurTech and insurance broking firm, indicates that Tier-III cities and smaller towns are now significant contributors to India's new insurance business. The report states that these regions account for approximately 62 per cent of total new insurance premiums in the current fiscal year. This trend suggests a shift in how new insurance business is generated in India. Smaller towns, aided by digital payment infrastructure like UPI and increased internet access, are showing higher rates of digital adoption. Probus highlights that this is a consistent pattern, with the contribution from these regions rising from 58 per cent to 62 per cent over the past three fiscal years. For the fiscal year 2024-25, the motor insurance segment saw notable growth at 25.6 per cent. This was attributed to increased awareness, digital access, and an expanded Point-of-Sale Person (PoSP) network. The report also observes that local distribution methods, including app-based onboarding and regional language interfaces, have facilitated wider access to insurance products. What may have been a compliance-driven purchase is increasingly being viewed as a financial planning tool in these areas. Across insurance verticals, fresh life insurance policies showed growth exceeding 60 per cent in FY 2024-25 compared to FY 2023-24. Non-life insurance, encompassing motor, health, and SME segments, also experienced growth. SME insurance emerged as the fastest-growing segment in FY 2024-25, with a 112 per cent increase. Rakesh Goyal, director, Probus, commented on the findings, noting the resilience of the Indian economy and the role of Tier-II and Tier-III cities in this. He stated that Probus's approach aligns with the goal of 'Insuring India by 2047,' by providing digital tools and strengthening PoSP models to offer insurance solutions to consumers in these emerging markets.


Business Standard
38 minutes ago
- Business Standard
DAEWOO India appoints EBG group as Strategic Partner for Home Appliances and Electronics Retail Expansion
EBG Group has partnered with DAEWOO a globally recognized Korean brand to exclusively extend their premium home appliances, electronics, and consumer goods to Indian market. This strategic alliance combines DAEWOO's cutting-edge technology and innovation with EBG's extensive marketing expertise and distribution networks. The association aims to disrupt India's home appliance and electronics retail by introducing high-quality, energy-efficient, and sustainable solutions tailored to modern Indian consumers. DAEWOO brings decades of technological innovation and high manufacturing standards, while EBG Group's deep understanding of Indian consumer preferences and retail operations positions it to successfully introduce and expand DAEWOO's products in India. According to Dr. Irfan Khan, Founder and CEO of EBG Group, 'the partnership aligns with EBG's long-term strategy to strengthen its market footprint, bringing premium appliances that meet the increasing demand for energy-efficient solutions. EBG Group will lead the retail and distribution expansion for DAEWOO Consumer Products across India, ensuring seamless access to products through a robust retail network and strong after-sales support. The focus is on creating a hassle-free shopping experience while providing consumers with reliable service infrastructure nationwide'. 'The partnership will introduce a range of high-performance, stylish and energy-efficient home appliances, including whole range of Home & Kitchen appliances as well as Smart home solutions, Mr. H. S. Bhatia, Managing Director, DAEWOO India said. With IoT-enabled devices and advanced energy-saving features, DAEWOO's products are designed to meet the needs of India's growing tech-savvy consumer base, who seek innovation, convenience, and sustainability. By combining technological advancements with deep market insights, both companies aim to bring premium, affordable, and high-tech solutions to Indian households, setting the stage for the next evolution in consumer electronics. 'EBG plans to create business opportunities for Indian entrepreneurs through an innovative franchise model. This initiative is expected to further strengthen DAEWOO's retail presence and empower local partners, with details to be announced soon', Mr. Hari Kiran, COO and Co-Founder of EBG Group said. 'We are excited to collaborate with Daewoo in bringing innovative, high-quality home appliances and electronics to India'. With DAEWOO brand EBG aim to develop a holistic ecosystem that enhances customer experience through reliable service, easy accessibility, and a nationwide after-sales network. About DAEWOO India DAEWOO is a global leader in the design and manufacturing of home appliances, electronics, and consumer goods. Known for its cutting-edge technology and commitment to quality, DAEWOO products are trusted by consumers around the world with presence in more than 70 countries. DAEWOO brand operates in India through their manufacturing and marketing partner M/s. Kelwon Electronics & Appliances Pvt. Ltd. With a focus on innovation and sustainability, DAEWOO continues to lead the way in creating products that make life easier, more comfortable, and more sustainable. About EBG Group EBG Group is a premier name in the Indian market, known for launching and managing premium tech and lifestyle brands. With an in-depth understanding of Indian consumer behaviour and a strong retail presence, EBG has built a reputation for providing innovative solutions and excellent customer experiences. Through this strategic partnership with DAEWOO, EBG aims to redefine the home appliances and electronics market in India.