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Market Intelligence › Basic Terminologies
What became fixed about the name after SEBI's categorisation
Published by The Retail Trader · AUG 02, 2026 · Mutual Funds & AMC
Earlier, funds could carry any name while the portfolio was something else. After categorisation, the definition of each category is fixed, and the name is now a promise.
Companies are placed in a ranked list by market capitalisation. The top part of that list is treated as large cap, the next as mid cap, and the one after as small cap.
A fund in each category has to keep a minimum share of its corpus in that same segment. So a large cap fund cannot become entirely smallcap even if it wants to.
These two names cause the most confusion:
• A multi cap fund has to keep a minimum allocation in all three segments.
• A flexi cap fund is free of that constraint — it can go anywhere.
• So the behaviour of a flexi cap depends more on the manager.
• The category name tells you the level of risk, not the quality.
Two funds in the same category can still be completely different. The category only gives the boundary — what the manager is doing inside that boundary has to be seen in the portfolio disclosure.
This article is for education only — it is not a buy or sell recommendation, makes no claim of a guaranteed return, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or the official source.