SEBI's classification of equity funds by company size — top 100 companies (Large Cap), 101–250 (Mid Cap), and 251st onwards (Small Cap).
SEBI defines market capitalisation tiers: Large Cap = top 100 listed companies by market cap; Mid Cap = 101st to 250th; Small Cap = 251st onwards. Funds are mandated to maintain minimum allocations in their respective tier, creating distinct risk-return profiles at each level.
Large Cap = India's 100 biggest companies (Reliance, TCS, HDFC Bank) — lower volatility, steady compounding. Mid Cap = growing businesses — higher growth, higher swings. Small Cap = emerging companies — highest long-term return potential, also highest risk, requiring a 10+ year horizon.
SEBI mandates: large-cap funds ≥80% in large-cap stocks; mid-cap funds ≥65% in mid-cap; small-cap funds ≥65% in small-cap.
AMFI publishes the official tier classification semi-annually; funds realign their portfolios accordingly.
Large-cap stocks are highly liquid; small-cap stocks can have lower liquidity, affecting trading costs and position sizing.
Flexi-cap and multi-cap funds can invest across all three tiers without minimum tier constraints.