Baroda Large & Mid Cap Fund NFO – Should you invest in such Combo Funds?

Baroda Large & Mid Cap Fund NFO – Should you invest in such Combo FundsBaroda Large & Mid Cap Fund NFO Review


Baroda Large & Mid Cap Fund NFO would open for subscription on August 17, 2020. One might be investing in large cap funds and midcap funds. One might be thinking that instead of investing in two such individual funds, why not to invest in a single combo fund that invests in large cap and midcap segment. This is where large cap & midcap fund come into the picture. Baroda mutual funds have come up with its large cap and midcap fund which invests in both these segments. In this article, we would provide Baroda Large & Mid Cap Fund NFO issue details and indicate whether one should invest in such combo mutual fund schemes.

Also Read: Best Largecap mutual funds to invest in 2020

What are Large Cap and Midcap Mutual Funds?

As the name indicates, these funds would invest in large cap stocks and midcap stocks in India. A large cap company is generally defined as trustworthy, reputable and strong. These are generally well-established and has a strong track record. On the other hand midcap stocks are between 101 to 250 in terms of market capitalization in NIFTY index / Sensex.

Baroda Large & Mid Cap Fund NFO Issue Details

This is an open-ended mutual fund scheme.

This scheme would open for subscription on August 17, 2020.

This scheme would close for subscription on August 31, 2020.

Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of MF units after the NFO period.

This scheme is available in both regular and direct plans.

This plan offers both growth option and dividend option.

This scheme is available for lump sum and SIP investment.

Minimum investment is Rs 5000 and in multiples of Rs 1 there-off for lump sum investments.

Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 6 months.

The NAV of the NFO is Rs 10 per unit now during initial subscription.

There is no entry load to invest in this mutual fund scheme.

There is an exit load of 1% if units are redeemed within 1 year beyond 10% of the units held.

This scheme is classified as moderately high risk mutual fund scheme.

Scheme total expense ratio (TER) is estimated at a maximum of 2.25% of the total assets on any day.

Download Baroda Large & Mid Cap Fund NFO SID here.

Who can invest in this mutual fund scheme?

Any of the following can invest in this scheme.

1) Resident Individuals

2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,

3) NRI’s

4) Foreign Portfolio Investors

Who is the Fund Manager of Baroda Large & Mid Cap Fund NFO?

Here are the fund manager details.

Mr. Sanjay Chawla (Chief Investment Officer) and Mr. Ashwani Kumar Agarwalla (Senior Analyst) (Dedicated fund manager for overseas investments).

What is the benchmark for this scheme?

The benchmark for this scheme is S&P BSE 250 Large MidCap 65:35 TRI.

What is the investment objective and strategy of this Baroda Large & Mid Cap Fund NFO?

The primary objective of the Scheme is to seek long term capital growth through investments in both large cap and mid cap stocks.

However, there is no assurance or guarantee that the investment objective of the Scheme will be realized.

What is the allocation pattern in this mutual fund scheme?

This fund investment pattern is as follows:

1) It invests 35% to 65% in equity and equity related Instruments of large cap companies including derivatives. The risk profile in this segment is high.

2) It invests 35% to 65% in equity and equity related Instruments of mid cap companies including derivatives. The risk profile in this segment is high.

3) It invests 0% to 30% in equity and equity related Instruments of other equities including small cap stocks. The risk profile in this segment is high.

4) It would invest 0% to 20% in debt and money market instruments. The risk profile in this segment is low to medium.

5) It would invest 0% to 10% in units issued by REITs and InvITs. The risk profile in this segment is medium to high.

You may also like: Top Midcap Funds for 2020

Why should you invest in such Large Cap Funds?

Here are a few reasons to invest in such schemes.

1) These large cap & midcap fund invests in large cap stocks and midcap stocks. Such funds invests in large cap stocks which are generally stable and midcap stocks that are potential multibaggers. Such funds can provide stability + faster growth.

2) This fund invests small portion in small cap fund too. While small cap funds are risky, such small cap stocks are future midcap or large cap stocks, hence called as high growth stocks.

3) Large cap stocks pay dividend too. This could provide dividend yield to your fund’s portfolio.

Some risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) This scheme invests in all three segments, i.e. large cap, midcap and small cap stocks. If you believe there is growth only one segment, investing in such funds would not provide value to you. E.g. midcap and small cap stocks have crashed in the last 2.5 years and taking a longer time to recover. In such a case, investors are turning towards large cap funds and balanced funds.

2) This fund would invest up to 65% in midcap and smallcap stocks which are high risk.

3) Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.

4) You can go through all risk factors indicated in the scheme related documents before investing.

How is the Performance of existing Largecap and midcap funds?

Let us see how some of the existing large cap & midcap fund performance is in the last 5 years. One should note that some of these funds are re-categorized in this segment as per SEBI guidelines in May-2018 and underlying performance may not be 100% accurate for large cap+midcap segment if we are viewing long term performance.

Performance of largecap & midcap fund in 2020

Also Read: Best Smallcap funds to invest in 2020

Should you invest in the Baroda Large & Mid Cap Fund NFO?

This mutual fund scheme invests majorly in large cap stocks and midcap stocks. It can even invest some portion in small cap stocks. Midcap and small cap segment are high risk. If you are a high risk investor and believe that such combo would work for you, you can invest in some of the top performing funds indicated above Instead of the testing with this new fund where we do not know how it would perform in the future.

Also, instead of investing in such combo funds that invests in all these segments, one can invest majorly in large cap funds and invest some portion in individual midcap and small cap mutual funds. If you feel any fund is not performing or particular segment is lagging, you can always replace with a better one. However, you would not have such choice if you invest in these combo funds.

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Suresh KP
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