Summary of "3 Best Large & Mid Cap funds of 2026"

Summary: 3 Best Large & Mid Cap Funds for 2026

Context & Market Overview

Large cap stocks provide portfolio stability, acting as the “foundation” or “trusted vans” of the market. Mid cap stocks add growth potential but come with higher volatility. Large & mid cap funds combine the stability of large caps with the growth potential of mid caps, making them suitable for a core portfolio.

SEBI mandates these funds allocate at least 35% each to:
- Large caps (top 100 companies by market cap)
- Mid caps (ranked 101-250)
The remaining 30% is flexible for fund managers to adjust exposure, including small caps.
In 2025, small and mid caps experienced volatility and corrections due to stretched valuations.
2026 is expected to offer better valuation comfort in large and mid caps.

Methodology for Fund Selection

Funds were selected based on:

10-year returns
Five-star ratings from Value Research and Morningstar
Critical risk-adjusted performance metrics:
- Sharpe ratio
- Sortino ratio
- Beta
- Standard deviation
Upside and downside capture ratios to assess performance in rising and falling markets
Comparison against benchmarks and peer categories

Fund 1: Bandhan Large & Mid Cap Fund Direct Growth

Launch: August 9, 2005; Direct plan since January 2013
AUM: ₹13,636 crore (as of Dec 31, 2025)
Benchmark: NIFTY Large Mid Cap 250 TRI
Expense Ratio: 0.55%
Managers: Manish Gudwani & Rahul Agarwal
Investment Philosophy: Growth at Reasonable Price (GARP), with a focus on value and quality

Top 5 Stocks: HDFC Bank, SBI, Axis Bank, HDFC AMC, 197 Communications

Top Sectors: Banks, Pharmaceuticals & Biotechnology, Finance, IT Software, Transport Services

Risk Metrics: - Standard Deviation: 13.21% (lower than category average 14.1%) - Beta: 0.99 (similar volatility to benchmark) - Sharpe Ratio: 1.3 (strong risk-adjusted returns) - Sortino Ratio: 1.8 (excellent downside risk-adjusted returns) - Upside Capture: 110.1% (outperforms benchmark in rising markets) - Downside Capture: 94% (falls less than benchmark in downturns)

Performance: Outperformed benchmark and category over 1, 3, 5, 7, and 10 years.

Fund 2: ICICI Prudential India Large & Mid Cap Fund Direct Growth

Launch: August 9, 2007; Direct plan since January 2013
AUM: ₹9,344 crore (as of Dec 31, 2025)
Benchmark: NIFTY Large Mid Cap 250 DDRI
Expense Ratio: 0.61%
Managers: Aditya Khamani & Amit Ganathra
Philosophy: Blend of value and growth; fully invested (no cash calls)

Top 5 Stocks: InterGlobe Aviation, Max Healthcare Institute, Eternal, Swiggy, L&T Finance

Top Sectors: Retailing, Healthcare Services, Banks, Finance, Pharmaceuticals & Biotechnology

Risk Metrics: - Standard Deviation: 14.74% (slightly higher than category average) - Beta: 1.05 (more volatile than benchmark) - Sharpe Ratio: 1.19 - Sortino Ratio: 1.53 - Upside Capture: 98% (slightly underperforms benchmark in rising markets) - Downside Capture: 90% (better protection in down markets)

Performance: Outperformed benchmark and category over 3, 5, 7, and 10 years; outperformed category but not benchmark in 1 year.

Fund 3: ICICI Pru Large & Mid Cap Fund Direct Growth

Launch: July 9, 1998; Direct plan since January 2013
AUM: ₹27,745 crore (as of Dec 31, 2025)
Benchmark: NIFTY Large Mid Cap 250 TRI
Expense Ratio: 0.76%
Manager: Ehab Dalwai
Philosophy: Portfolio construction based on macroeconomic outlook, global/domestic exposure; tactical small cap allocation possible

Top 5 Stocks: Axis Bank, SBI Cards & Payment Services, FSN E-Commerce Ventures, ICICI Bank, Page Industries

Top Sectors: Financial Services, Automobiles & Auto Components, Consumer Services, FMCG, Capital Goods

Risk Metrics: - Standard Deviation: 11.56% (significantly lower than category average) - Beta: 0.88 (less volatile than benchmark) - Sharpe Ratio: 1.29 - Sortino Ratio: 1.84 - Upside Capture: 92% (underperforms benchmark in rising markets) - Downside Capture: 80% (better downside protection)

Performance: Outperformed benchmark and category over 1, 3, 5, 7, and 10 years.

Additional Notes

Portfolio overlap among the three funds is low, making them complementary in a diversified portfolio.
Investors should consider their own risk appetite, investment horizon, and conduct personal research.
Disclaimer: This summary is not financial advice. Investments are subject to market risk. Read all related documents carefully before investing.

Key Instruments & Sectors Mentioned

Stocks: HDFC Bank, SBI, Axis Bank, HDFC AMC, 197 Communications, InterGlobe Aviation, Max Healthcare, Eternal, Swiggy, L&T Finance, SBI Cards, FSN E-Commerce Ventures, Page Industries

Sectors: Banking, Pharmaceuticals & Biotechnology, Finance, IT Software, Transport Services, Retailing, Healthcare Services, Financial Services, Automobiles, Consumer Services, FMCG, Capital Goods

Benchmark: NIFTY Large Mid Cap 250 TRI / DDRI

Instruments: Large & Mid Cap Mutual Funds

Presenters / Sources

Fund Managers:
- Manish Gudwani, Rahul Agarwal (Bandhan)
- Aditya Khamani, Amit Ganathra (ICICI Prudential India Large & Mid Cap)
- Ehab Dalwai (ICICI Pru Large & Mid Cap)
Data Sources: Value Research, Morningstar
Video Host: Unnamed presenter (YouTube channel)

This summary captures the financial analysis, fund details, risk metrics, and performance insights for the top three large and mid cap mutual funds recommended for 2026 investment consideration.