Mutual Funds are one of the safest investment options for an investor today. These funds are carefully formulated to provide the investor with maximum returns on their investment. While selecting a fund for investment, the investor needs to consider many factors one of which is the category of funds. There are three broad categories of companies that mutual funds invest in namely, large-cap funds, mid-cap funds, and small-cap funds. Investors can select a suitable investment product depending on their risk appetite, return expectations, amount of investment that they can make, etc.
Given below are the details of the mid-cap funds and the best mid-cap funds for investment today.
What are midcap funds?
Mid-cap funds are equity mutual funds that invest a minimum of 65% of their assets in companies that have medium market capitalization. This means that the market capitalization of these companies is anywhere between Rs.500 crores and Rs.10,000 crores. Investment in mid-cap companies is a high-risk high-return scenario. These companies have the potential to perform better than the large-cap companies in the time of a bullish market. However, during a bearish market, these investments fall hard.
Things to keep in mind about midcap funds
There are many risks associated with an investment in mid-cap funds. Investors need to have thorough market research and analysis before investing in mid-cap funds. The details of some of the risks associated with mid-caps are mentioned below,
- Inherent risk
While investment in mid-cap funds is fruitful in long term, mid-cap companies can potentially take a huge hit during bearish times. This is on account of such companies having a low customer base and relatively fewer resources to sustain a heavy economic slowdown. Although the fund managers take due care before investing in any mid-cap company, there is always a high inherent risk that cannot be completely evaded.
- Liquidity
Liquidity in any fund is of key importance and it also affects fund returns. Mis caps have relatively fewer shares in the market which makes it difficult to make an immediate exit.
- Market fluctuations
Mid-cap funds are prone to high volatility at the time of market fluctuations. The fluctuations of the market can lead to a huge decline in mid-cap funds which may not happen in large-cap funds.
Top midcap funds
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Kotak Emerging Equity Scheme Growth
About the Fund
Kotak Emerging Equity Scheme Growth is a mid cap fund having investments in equity and equity-related securities in mid cap companies. This is an open ended fund with an exit load of 1% if the fund is sold before the completion of 12 months.
| Inception Date | 30th March 2007 |
| Benchmark Name | Nifty Midcap 100 TRI |
| Fund Manager | Mr. Pankaj Tibrewal |
| Objective | To provide long-term capital appreciation through a portfolio of equity and equity-related securities by investing predominantly in Midcap companies. |
Sector Allocation
The sector-wise allocation of investments across the fund is tabled below.
| Sectors | Percentage Allocation |
| Industrial Manufacturing | 19.81% |
| Consumer Goods | 13.97% |
| Financial Services | 12.91% |
| Fertilizers and Pesticides | 7.29% |
| Cement & Cement Products | 6.7% |
| Automobile | 6.06% |
| Pharma | 5.95% |
| Construction | 5.62% |
| Metals | 4.82% |
| Chemicals | 4.58% |
| Others | 12.29% |
Historical Return of the Fund (annualized)
| Period | 6 months | 1yr | 3 yr | 5 yrs |
| Returns | 39.98% | 30.34% | 13.81% | 20.63% |
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Edelweiss Midcap Fund Growth
About the Fund
Edelweiss Midcap Fund Growth is another open-ended equity midcap fund predominantly investing in midcap companies that are potential wealth creators. The scheme sleets the stocks to invest in based on careful analysis of the company, its products, growth potential, potential to withstand the downturn of the economy, etc.
| Inception Date | 26th December 2007 |
| Benchmark Name | Nifty Midcap 100 TRI |
| Fund Manager | Mr. Harshad Patwardhan |
| Objective | To provide long-term capital appreciation through equity portfolio by investing predominantly in Midcap companies. |
Sector Allocation
The sector wise allocation of investments across the fund is tabled below.
| Sectors | Percentage Allocation |
| Financial Services | 23.01% |
| Consumer Goods | 15.57% |
| Industrial Manufacturing | 13.14% |
| Automobile | 10.62% |
| Fertilizers and Pesticides | 4.85% |
| Construction | 4.75% |
| IT | 4.57% |
| Cement and Cement Products | 3.99% |
| Pharma | 3.58% |
| Chemicals | 3.17% |
| Others | 12.75% |
Historical Return of the Fund (annualized)
| Period | 6 months | 1yr | 3 yr | 5 yrs |
| Returns | 40.98% | 35.16% | 12.81% | 19.49% |
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Axis Midcap Fund Growth
About the Fund
Axis Midcap Fund-Growth invests in mid-cap companies that have the potential to provide higher returns based on their growth trajectory. The fund has hugely diversified investments across various sectors or industries.
| Inception Date | 18th February 2011 |
| Benchmark Name | S&P BSE Midcap TRI |
| Fund Manager | Mr. Shreyash Devalkar |
| Objective | To provide long-term capital appreciation through equity and equity related instruments portfolio by investing predominantly in Midcap companies. |
Sector Allocation
The top sector wise allocation of investments across the fund is tabled below.
| Sectors | Percentage Allocation |
| Financial Services | 20.18% |
| Consumer Cyclical | 20.12% |
| Basic Materials | 14.60% |
| Industrials | 12.20% |
| Technology | 11.41% |
| Healthcare | 10.24% |
| Consumer Defensive | 5.98% |
| Utilities Services | 2.95% |
| Communication Services | 2.31% |
Historical Return of the Fund (annualized)
| Period | 6 months | 1yr | 3 yr | 5 yrs |
| Returns | 30.93% | 27.93% | 19.68% | 21.23% |
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HDFC Mid-Cap Opportunities Fund
About the Fund
This fund was initiated in the year 2007 and has invested in targetted mid cap companies that have huge growth potential with assessed risk. The fund invests in companies with sustainable growth models, good financial strength, etc that provide a reasonable opportunity for the investors to gain higher returns on their investment.
| Inception Date | 25th June 2007 |
| Benchmark Name | NIFTY MIDCAP 100 TRI |
| Fund Manager | Mr. Chirag Setalvad |
| Objective | To generate long-term capital appreciation through investment in predominantly Midcap companies. |
Sector Allocation
The top sector wise allocation of investments across the fund is as below.
| Sectors | Percentage Allocation |
| Financial Services | 20.48% |
| Engineering | 12.06% |
| Chemicals | 13.14% |
| Consumer Durables | 10.10% |
| Automobile | 8.74% |
| Healthcare | 7.75% |
| FMCG | 5.93% |
| Metals | 5.10% |
| Technology | 4.12% |
| Services | 3.95% |
| Construction | 3.40% |
| Others | 5.23% |
Historical Return of the Fund (annualized)
| Period | 6 months | 1yr | 3 yr | 5 yrs |
| Returns | 34.77% | 28.05% | 9.53% | 17.71% |
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UTI Mid-Cap Fund
About this Fund
This mid cap fund invests predominantly in mid cap companies that have a higher growth potential than large cap companies. The fund is ideal for investors looking for higher returns but also has an appetite for high risk and can stay invested in the fund for a long term (preferably for at least 5 years).
| Inception Date | 7th April 2004 |
| Benchmark Name | NIFTY MIDCAP 150 |
| Fund Manager | Mr. Ankit Agarwal |
| Objective | To generate long-term capital appreciation through investment predominantly in equity and equity related securities of Midcap companies. |
Sector Allocation
The top sector wise allocation of investments across the fund is tabled below.
| Sectors | Percentage Allocation |
| Consumer Goods | 20.55% |
| Financial Services | 15.47% |
| Industrial Manufacturing | 12.4% |
| Automobile | 8.03% |
| IT | 7.29% |
| Pharma | 6.57% |
| Fertilizers & Pesticides | 6.3% |
| Healthcare Services | 5.64% |
| Technology | 4.12% |
| Services | 3.95% |
| Construction | 3.40% |
| Others | 5.23% |
Historical Returns of the fund (annualized)
| Period | 6 months | 1yr | 3 yr | 5 yrs |
| Returns | 35.76% | 34.99% | 10.16% | 16.36% |
How to invest in Mid cap funds?
Investing in the midcap funds is very easy now. Investors can simply download the Finity App (available on the Google Playstore as well as Appstore) and start investing by adding basic details like a bank account and providing the necessary KYC. The steps to invest in midcaps through the app are stated below.
- The first step is to download the application from the playstore and open it.
- The investor will have to login using their email id and phone number to proceed.
- After that, the investor will have to provide their bank details and basic KYC to start investing in their chosen midcap fund.
- To start the investment procedure after logging in, the investor will have to select ‘Equity’ from the home page and then select ‘Mid Cap’
- The investor will be taken to a new page displaying all the available midcap funds and has the option to view the details of any fund (returns, portfolio, fund facts, etc)
- The next step is to click on ‘Invest’
- The investor can select to invest as ‘SIP’ or ‘Lumpsum’ and then enter the desired amount of investment.
- After that, the basic details will have to be entered followed by the payment procedure to complete the investment procedure.
Conclusion
Investment in mid cap funds is considered to be a high-risk investment. But these companies have the potential to provide higher returns than large cap companies in the long run. An investor needs to stay invested in this product for a longer period of time (at least 5 to 7 years) for the fund to grow and generate higher returns. Investors can start with an investment amount as low as Rs. 500 per month or lump sum amount of Rs. 5000 in most of these schemes to gradually build a corpus fund that will yield higher returns in long term.
Frequently Asked Questions
What are the three broad categories of mutual funds based on the market capitalization of companies?
The three broad categories of mutual funds based on market capitalization of companies is,
- Large Cap Funds
- Mid Cap Funds
- Small Cap Fund
What is the minimum investment of a mid cap fund needed in mid cap companies?
Mid cap fund has to invest a minimum of 65% of the fund in the mid cap companies.
Is mid cap suitable for risk averse investors?
Investing in mid cap funds is a high risk high return scenario. It is relatively riskier than investing in large cap funds. Hence it is more suitable for investors with a high risk appetite.
What is an expense ratio for mutual funds?
Expense ratio is the charges levied by the fund to manage the investment portfolio of the investor. It is a nominal charge and is expressed in terms of percentage.
What are the rankings of the stocks invested in the midcap segment?
Mid cap funds segment are the funds that invest in stocks ranking from 101 to 250th in terms of market capitalization as per the revised guidelines of SEBI.
