Large-cap mutual fund schemes have increased their exposure to mid-cap stocks to the highest level in nearly four years, according to data compiled by Elara Capital. The allocation to mid-cap stocks rose to 9.2 percent of assets under management (AUM) in May 2026, compared with 7.5 percent in the same month last year.

At the same time, large-cap funds marginally reduced their allocation to large-cap stocks, which declined to 84.3 percent of AUM from 84.9 percent a year earlier. The trend suggests that fund managers are selectively increasing exposure to mid-sized companies in search of better growth opportunities while maintaining the core large-cap orientation mandated for such schemes.

The increase in mid-cap allocation comes amid continued investor interest in broader market segments, with several mid-cap companies delivering strong earnings growth and business expansion over the past year. Fund managers appear to be balancing valuation concerns in large-cap stocks with opportunities available in quality mid-cap businesses.

Industry experts, however, noted that investors should not place excessive emphasis on minor shifts in portfolio allocation within a fund. The overall asset allocation strategy, investment horizon, risk profile, and fund management approach remain more important factors when evaluating mutual fund investments.

The data highlights an evolving investment landscape in which large-cap fund managers are utilizing the flexibility available within regulatory limits to diversify portfolios and enhance return potential while continuing to maintain a dominant allocation to large-cap equities.