How to invest in the NIFTY LargeMidcap 250 Index

How to invest in the NIFTY LargeMidcap 250 Index

Published: May 24, 2019 at 1:17 pm

Last Updated on

Here is how you can replicate the returns and performance of NIFTY LargeMidcap 250 Index using Nifty 50 and Nifty next 50 Index funds. Motilal Oswal had filed an NFO application based on this index with SEBI, but this is unlikely to see the light of day (and that is good for investors). This post is based on a request made on Youtube. Let us start with the basics.

 What is the NIFTY LargeMidcap 250 Index?  This is a 250 stock index based on 50% of Nifty 100 (large cap index) and 50% Nifty Midcap 150 (midcap index) reset on a quarterly basis.

Why should I take this fund seriously? The active equity mutual fund performance report May 2019 was published just a few days ago. A relevant section is reproduced below. Take multicap funds as an example. There are 42 of them, and if we apply >= 70% return outperformance consistency filter for 5 years, we only have 15 and if we apply the >= 70% downside protection consistency, we left with 14.  This is shown below as 42-> 15-> 14. Notice how in all categories listed below, it is pretty hard to beat the Nifty LargeMidcap250 TRI.

MulticapNifty Largemidcap 250 TRI42 -> 15 -> 14
ELSSNifty Largemidcap 250 TRI31 -> 9 -> 8
Large & Mid capNifty Largemidcap 250 TRI20 -> 8 -> 8
Value-orientedNifty Largemidcap 250 TRI14 -> 7 -> 6

In fact, we also saw, Aditya Birla Sun Life Tax Relief 96 Fund one of the most consistent ELSS performers has a risk and reward profile close to the Nifty LargeMidcap 250. Hence this index is a good choice to consider for young earners and those who prefer index investing.

How to invest in the NIFTY LargeMidcap 250 IndexHow to invest in the NIFTY LargeMidcap 250 Index

Even if there was an ETF or index fund tracking the Nifty Largemidcap 250, it would be better to try and replicate its performance with NIfty 50 and Nifty Next 50 index funds. Why? A 250 index would be tough to manage as even “large cap” stocks are not liquid enough!. So a 250 index fund could have tracking errors especially if the AUM is not high enough (why AUM is important:  These five index funds beat their indices! Why you should avoid them!)

Nifty Largemidcap 250 vs Nifty 50 vs Nifty Next 50

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

So with Nifty 50 and NIfty Next 50 Index funds, the investor has a lot more flexibility in trying to replicate the N250 index. Even if they do not wish to replicate, it can be used as a benchmark for an NN50 + N50 portfolio (with more of NN50).


  1. Download index data from
  2. Get Monthly data.
  3. Compute month returns
  4. Check what combination of Nifty 50 and Nifty Next 50 monthly returns closely match Nifty LargeMidcap 250 Index monthly returns.
  5. Change Nifty 50  exposure until the difference between the two sets of returns is minimized.

Nifty Largemidcap 50 blend indexA mix of 45% Nifty 50  TRI and 55% Nifty Next 50 TRI was able to reasonably match the monthly movement of NIfty LargeMIdcap 250 TRI. However, it is important to keep in mind that this approximate and based on a monthly reset (the index itself has a quarterly reset) and of course based on past data. There are 170 data points in the above graph (each line)

A more practical method would be to rebalance only once a year. This results in a mix of 58% Nifty 50 and 42% Nifty Next 50 for the lowest return difference. However, this can be rounded off to 60% Nifty 50, which I like in terms of lower risk.

Nifty Largemidcap 50 blend index annual rebalancingNote that there only 15 data points in this graph ( each line). While a more thorough study would use every possible 1Y return on a rolling basis, I think intuitively and psychologically 60% of Nifty 50 is appealing.

In summary, a mix of 60% Nifty 50 and 40% Nifty Next 50 Indices with annual rebalancing can be used by investors to replicate the performance of Nifty LargeMidcap 250 index.  Which index fund s should I use? Check out previous posts

Do share if you found this useful
Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media

Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Do check out my books

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

Leave a Reply

Your email address will not be published. Required fields are marked *