Bandhan Large and Midcap Fund: The Balanced Approach to India's Growth Story

The Indian stock market is at a fascinating inflection point. The economy is steady, growth prospects are compelling, yet valuations have tempered from their peaks. In this environment, investors face a real dilemma: chase large-cap stability or go all-in on midcap dynamism. Most end up stuck in the middle, never fully committing to either.

Enter Bandhan Large and Midcap Fund, a solution that doesn't force this choice.

This fund captures the best of both worlds, blending the defensive characteristics of established large caps with the explosive growth potential of emerging midcap companies. With over 20 years of track record, ₹10,818 crore in assets under management, and a 3-year return of 23.81% (as of September 2025), it's become a go-to option for investors seeking a practical middle ground.

But what makes it special isn't just the balance. It's how the fund achieves it.

Why Large and Midcap Now?

India's economy is entering what experts call a soft-landing phase. Growth remains healthy but no longer explosive. This environment naturally favors large and midcap companies, which represent over 80% of the total market capitalization and collectively operate across 20+ sectors.

Here's the strategic advantage: certain sectors like chemicals, textiles, and real estate exist predominantly in the midcap space and are absent or underrepresented among large caps. This gives the fund access to structural growth stories that pure large-cap funds simply cannot touch.

The numbers tell the story. The Nifty Large Midcap 250 index has delivered more than a 15% compound annual growth rate (CAGR) around 67% of the time over a 3-year period and 60% of the time over 5 years. These aren't outlier returns. This is consistency.

The Fund's Investment Philosophy: Active, Not Passive

What separates Bandhan Large and Midcap Fund from passive index trackers is its unapologetically active approach. Led by Manish Gunwani, Head of Equities at Bandhan Mutual Fund with 28 years of experience managing over ₹1.2 lakh crore in previous roles, the fund doesn't simply buy and hold.

The portfolio turnover ratio stands at 128%, double the category median of 69.42%. This agility matters. It means the fund isn't stuck with yesterday's winners. Instead, the team systematically rotates holdings to capture emerging opportunities and exits positions losing their strategic appeal.

This isn't reckless trading. The fund's approach follows a disciplined, research-first methodology built on three pillars:

High-growth quality businesses with scalable earnings form the foundation. These are companies with proven business models and competitive moats. They account for 59% of the portfolio, providing downside protection.

Selective cyclicals make up 26% of holdings, allowing the fund to capture tactical opportunities when valuations make sense. This is where midcaps shine. A cyclical upturn in sectors like automobiles or metals can unlock significant value.

The remaining 10% comprises opportunistic and value plays, keeping the portfolio flexible and allowing the fund to deploy cash at attractive entry points.

Portfolio Quality That Speaks Volumes

Numbers don't lie. Bandhan Large and Midcap Fund trades at a P/E ratio of 46.59, notably lower than the category median of 52.88. This means investors are paying less for each rupee of earnings. The P/B ratio of 6.47 versus the category median of 8.54 reinforces this point.

The fund achieves this pricing advantage despite superior risk-adjusted returns. Its Sharpe ratio of 1.21 trounces the category median of 0.71, while its Sortino ratio of 2.21 versus 1.33 shows it's particularly adept at avoiding downside volatility. The Information Ratio of 1.58 against a category median of 0.84 confirms the fund manager's consistent ability to outperform through stock selection, not luck.

Concentration risk is minimal. The top 10 holdings represent just 26% of the portfolio, meaning returns aren't dependent on a handful of mega bets. This diversification has paid dividends, with Services, IT, and Metals & Mining sectors driving recent outperformance.

Performance That Proves the Concept

Let's talk about what investors actually care about: returns.

Since its inception in August 2005, Bandhan Large and Midcap Fund has delivered a NAV that has grown 13.7 times. Over the last 3 years, it's returned 23.81% annually versus the category median of 16.63%. The 5-year annualized return of 25.20% beats the benchmark's 23.11% and crushes most peers.

What's particularly impressive is the 1-year performance of 9.2% in a year when the category struggled (year-to-date returns were negative at -3.96% as of September 2025). This resilience suggests genuine alpha generation rather than passive index-following.

The rolling returns analysis tells an even more compelling story. The fund has generated returns exceeding 15% over most rolling 1-year periods, and consistently outperforms its benchmark across all time horizons. Even in down markets, it has limited losses more effectively than the index.

The Manish Gunwani Effect

No discussion of this fund is complete without acknowledging its fund manager. Manish Gunwani took over in 2023, and the improvement in fund performance has been marked. Previously, he served as CIO of Equities at Nippon India MF and Deputy CIO at ICICI Prudential AMC, managing AUMs exceeding ₹1.2 lakh Crore.

His appointment wasn't coincidental. Bandhan specifically brought him in to elevate its equity strategy. The results speak for themselves. Supporting him is Rahul Agarwal, Vice President of Equity, who brings 9 years of experience with deep sectoral expertise in Oil & Gas, Industrials, Infrastructure, and Healthcare.

This isn't a one-man show. The team structure ensures continuity and reduces key-person risk. Yet it's also clear that investment conviction flows from experienced hands.

Risk Management Without Compromise

Equity funds carry risk. The fund doesn't shy away from this reality. It carries a standard deviation of 13.47% and a beta of 0.94, both marginally lower than the category average. This suggests the fund is slightly less volatile than the market while still capturing market movements.

The exit load structure incentivizes long-term investing. There's no load on up to 10% of investments redeemed within a year, but 1% is levied on the remainder. This is reasonable and aligns investor interests with the fund's strategy.

Tax Efficiency

India's mutual fund taxation is investor-friendly for long-term holders. Short-term capital gains (under one year) are taxed at 20%, while long-term gains (over one year) face a 12.5% tax rate with an exemption on the first ₹1.25 lakh annually. As long as you hold the fund, no tax is payable, allowing compound growth to work its magic.

Who Should Invest?

Bandhan Large and Midcap Fund suits several investor archetypes:

• Core Portfolio Builders: Investors constructing a foundational equity portfolio need exposure to this segment. The fund's combination of large and midcap exposure provides the backbone of a diversified portfolio without the specific risks of pure midcap or large-cap funds.
  

• Balanced Growth Seekers: Those wanting large-cap stability with midcap growth in a single holding find their answer here. There's no need to juggle multiple funds.
  

• Long-Term Investors: The fund's suggested investment horizon is 5+ years. Investors who can stomach short-term volatility and stay disciplined through cycles will witness the power of compound growth.
  

• Investors Seeking Alpha: Active stock pickers who believe in research-driven selection over passive indexing should consider this. The fund's 59% active share demonstrates real conviction.
  

Deployment Strategy

For lump-sum investments, consider current market conditions. If you believe valuations are fair (not cheap) and have a 5+ year horizon, allocate accordingly. The fund's current cash position of 5.1% provides flexibility for the manager to deploy opportunistically.

For systematic investors, SIPs with annual top-ups (10-20%) create powerful rupee-cost averaging benefits. This approach neutralizes market timing concerns and transforms market volatility from a risk into an opportunity.

The Bottom Line

Bandhan Large and Midcap Fund isn't revolutionary in concept. Balanced portfolios are old hat. What makes it distinctive is execution. The fund delivers what it promises: stability of large caps without forgoing the growth of midcaps, all managed by a seasoned team using disciplined research.

In an Indian market that's neither cheap nor expensive, neither booming nor stagnant, this balanced approach feels timely. Investors aren't seeking moonshot returns. They're seeking steady, meaningful wealth creation. This fund delivers exactly that.

For MFDs, here's the pitch: Your clients don't need to choose between large and midcap growth. They can have both. Bandhan Large and Midcap Fund offers that rare combination of quality holdings, proven management, and consistent outperformance, all in one portfolio. It's not a flashy story. It's a reliable one. And reliable stories compound beautifully.

Frequently Asked Questions

What is the difference between this fund and a pure large-cap pure midcap fund?

Pure large-cap funds invest predominantly in India's top 100 companies, offering stability but limited growth potential in emerging sectors. Pure midcap funds pursue higher returns but carry significantly higher volatility and liquidity risk. Bandhan Large and Midcap Fund mandates at least 35% each in large and mid caps, giving you the best of both with less volatility than a pure midcap fund and better growth potential than a pure large cap fund.

Is Bandhan Large and Midcap Fund safe for conservative investors?

The fund carries a "Very High" risk rating, making it unsuitable for highly conservative investors seeking capital preservation. However, it is suitable for moderate-to-aggressive investors with 5+ year horizons

How does this fund perform during market downturns?

The fund has outperformed its benchmark during downturns, limiting losses more effectively than pure midcap funds. For example, its rolling 1-year performance shows negative returns occurring just 22.57% of the time compared to 27.09% for the benchmark, demonstrating better downside capture. During September 2025 volatility, the fund remained steady, validating its risk management approach.

What is the expense ratio, and is it competitive?

The fund carries an expense ratio of 0.56%, which is moderate within the category. This allows the skilled investment team to operate while keeping costs reasonable for investors. The Information Ratio of 1.58 proves the active management justifies the cost through outperformance.

Should I invest as a lump sum or through SIP?

Both approaches work, but the choice depends on your market outlook and time availability. A lump-sum investment is suitable if you have idle cash ready to deploy and a long-term horizon (5+ years). If markets feel overheated, you can also opt for a 6-9 month STP to spread out the entry smoothly. For most investors, SIPs with annual 10-20% top-ups provide a disciplined, rupee-cost-averaged entry that neutralizes market timing risk.