Equity Funds — Large Cap, Mid Cap, Small Cap, Flexi Cap, Multi Cap
Several equity categories are defined by the size of the companies they hold: Large Cap, Mid Cap, Small Cap, Large & Mid Cap, Flexi Cap and Multi Cap. This lesson sets out what each must hold and the risk that comes with company size.
How size is measured
Market capitalisation is a company's share price multiplied by its number of shares: the stock market's current value for the whole company. SEBI's categorisation ranks listed companies by full market capitalisation.
The 100 largest are large cap, those ranked 101st to 250th are mid cap, and those ranked 251st onwards are small cap. AMFI publishes the list every six months from end-June and end-December data, and funds rebalance within a month.
What each category must hold
A Large Cap Fund holds at least 80% of its assets in large-cap companies; the remaining 20% can be in other securities. A Mid Cap Fund holds at least 65% in mid-cap companies, and a Small Cap Fund at least 65% in small-cap companies. A Large & Mid Cap Fund holds at least 35% in large caps and at least 35% in mid caps.
A Flexi Cap Fund holds at least 65% in equity, with no fixed split between large, mid and small caps. A Multi Cap Fund holds at least 75% in equity, with at least 25% each in large, mid and small caps.
Flexi Cap and Multi Cap compared
The names sound alike, but the rules differ. Flexi Cap leaves the size mix to the fund manager, who can hold mostly large caps at one time and more mid or small caps at another.
Multi Cap requires a minimum in all three segments, so at least a quarter of the portfolio is in mid caps and another quarter in small caps. The difference is one of constraint; the categorisation says nothing about which earns more.
The risk that comes with size
All these schemes are market-linked. Their NAV rises and falls with share prices, and an investor can get back less than was invested.
Smaller companies' share prices have usually moved more sharply than larger ones, in both directions. So the more a category must hold in mid and small caps, the more exposed it is to sharp swings. A large-cap label lowers that exposure; it does not remove market risk.
Rules at a glance
Same company, new label (illustrative)
Suppose a company is ranked 104th in one AMFI list, so it is a mid cap. Its market capitalisation grows, and in the next list six months later it is ranked 97th. It is now a large cap.
A Mid Cap Fund holding its shares finds that the holding no longer counts towards its 65% in mid caps, while for a Large Cap Fund it now counts towards the 80%. Funds rebalance within a month of the new list.
Checking a Multi Cap Fund against its rule (assumed figures)
- Assume a Multi Cap Fund has assets of ₹2,000 crore.
- Minimum in large caps: 25% of ₹2,000 crore = ₹500 crore. The same minimum applies to mid caps (₹500 crore) and to small caps (₹500 crore).
- The three minimums add up to ₹500 crore × 3 = ₹1,500 crore, which is 75% of ₹2,000 crore, the fund's minimum in equity.
- The balance is ₹2,000 crore − ₹1,500 crore = ₹500 crore, or 25% of assets, which is not tied to any one segment.
Result. At least ₹500 crore sits in each of large, mid and small caps. A Flexi Cap Fund of the same size would need at least 65% of ₹2,000 crore = ₹1,300 crore in equity, with no minimum for any one segment.
Key points
- Large cap means the 100 largest companies by full market capitalisation; mid cap the 101st to 250th; small cap the 251st onwards.
- A Large Cap Fund holds at least 80% in large caps; Mid Cap and Small Cap Funds hold at least 65% in their own segment.
- A Flexi Cap Fund holds at least 65% in equity with no fixed split by size.
- A Multi Cap Fund holds at least 75% in equity, with at least 25% each in large, mid and small caps.
- Every equity fund can lose value, and smaller companies' prices can move more sharply.
Common misunderstandings
- Flexi Cap and Multi Cap are not the same: Flexi Cap has no fixed split by size, while Multi Cap needs at least 25% in each of large, mid and small caps.
- A Large Cap Fund is not wholly in large caps: the rule is at least 80%, and the remaining 20% can be in other securities.
- Large cap does not mean free of risk: a Large Cap Fund is market-linked and its value can fall.
Questions people ask
Which size-based category gives the fund manager the most flexibility?
The Flexi Cap Fund. Its only requirement is at least 65% in equity, with no restriction on how that is divided between large, mid and small caps.
Which companies are mid caps?
Those ranked 101st to 250th by full market capitalisation in the list AMFI publishes every six months.
What makes a Multi Cap Fund different from a Flexi Cap Fund?
A Multi Cap Fund must keep at least 25% in each of large, mid and small caps. A Flexi Cap Fund has no minimum for any segment.
What this lesson relies on
- SEBI Master Circular for Mutual Funds (20 March 2026) — Chapter 3, categorisation of mutual fund schemes
- SEBI circular of 26 February 2026 on categorisation of mutual fund schemes
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.