New Delhi, Aug. 9 -- HDFC Mid Cap Fund has crossed the Rs.1 lakh crore AUM milestone, becoming the fourth active mutual fund scheme to reach this level after Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund and HDFC Balanced Advantage Fund. The milestone has also raised a question for investors: can a mutual fund become too large to deliver strong returns?

Wealth managers and investment strategists say investors should not avoid a fund simply because of its size. However, a very large corpus can matter in segments where the underlying market has limited depth or liquidity, making it important to look beyond AUM when evaluating a scheme.

Bharath Rathore, executive director at Anand Rathi Wealth, said investors should not avoid a mutual f...