What the caps mean
Companies are grouped by market capitalisation: large caps are the top 100, mid caps rank 101–250, and small caps are 251 and below. Size is a shorthand for stability, liquidity and growth potential.
Risk and return
Large caps tend to be steadier and more liquid, with moderate growth. Mid caps offer higher growth with more volatility. Small caps have the highest growth potential but also the sharpest swings and risk — they suit long horizons.
Which suits you?
Your mix depends on risk appetite and time frame. A common approach: anchor a portfolio in large-cap or index funds, add mid and small-cap funds for growth if you can stay invested through volatility. Flexi-cap funds leave the mix to the manager.
Frequently asked questions
Are small-cap funds riskier than large-cap funds?
Yes. Small caps have higher growth potential but are the most volatile and can fall sharply, so they suit long horizons and higher risk tolerance.
Which is best for beginners?
Many beginners start with large-cap or index funds for relative stability, then add mid and small caps gradually as they build conviction and horizon.
What is a flexi-cap fund?
A flexi-cap fund invests across large, mid and small caps with no fixed allocation, letting the fund manager shift between segments.