Wanted to invest in companies that are growing rapidly and can become big in the future? Then, explore the mid cap funds that provide you a way to invest in multiple mid-cap companies simultaneously and at a much lower cost. In this blog, we’ll go through in detail the meaning of a mid cap mutual fund, 10 top performing mid cap mutual funds, pros, and cons of investing in them.
What is Mid Cap Fund?
A mid cap mutual fund is one of the types of equity funds that have to invest a minimum of 65% of its total assets in mid-cap stocks. Mid-cap stocks rank from 101 to 250 in terms of full market capitalization on the stock exchange.
These mutual funds provide a chance to invest in companies that have a market capitalization of between ₹5,000 crores to ₹20,000 crores. These companies have a high growth potential with a huge level of capital expenditure and expansion activity. Their nature to adapt to the current market opportunities makes them ideal for capital appreciation and wealth creation purposes.
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Best Mid Cap Mutual Fund to Invest for 5 Years
Here is the list of the top performing mid cap mutual funds (Direct-Growth) to invest in for the long term:
| Mid Cap Fund Name | Benchmark | Fund Size (in ₹ crores) | 1 Year Returns (%) | 5 Year Returns (%) | Expense Ratio (%) | ||
|---|---|---|---|---|---|---|---|
| Fund | Benchmark | Fund | Category Avg | Fund | |||
| Motilal Oswal Midcap Fund | Nifty Midcap 150 TRI | ₹20,055.68 | 63.72% | 28.00% | 34.06% | 0.73% | 0.57% |
| Quant Mid Cap Fund | Nifty Midcap 150 TRI | ₹8,940.54 | 30.06% | 28.00% | 33.99% | 0.73% | 0.58% |
| Edelweiss Mid Cap Fund | Nifty Midcap 150 TRI | ₹7,677.01 | 48.52% | 28.00% | 31.73% | 0.73% | 0.40% |
| PGIM India Midcap Opportunities Fund | Nifty Midcap 150 TRI | ₹10,942.72 | 25.87% | 28.00% | 30.51% | 0.73% | 0.46% |
| Mahindra Manulife Mid Cap Fund | Nifty Midcap 150 TRI | ₹3,340.74 | 41.55% | 28.00% | 30.03% | 0.73% | 0.48% |
| Nippon India Growth Fund | Nifty Midcap 150 TRI | ₹33,922.4 | 38.54% | 28.00% | 29.89% | 0.73% | 0.79% |
| HDFC Mid-Cap Opportunities Fund | Nifty Midcap 150 TRI | ₹75,037.43 | 36.35% | 28.00% | 29.36% | 0.73% | 0.74% |
| Invesco India Mid Cap Fund | Nifty Midcap 150 TRI | ₹5,624.96 | 49.21% | 28.00% | 29.33% | 0.73% | 0.58% |
| Kotak Emerging Equity Fund | Nifty Midcap 150 TRI | ₹50,627.29 | 41.02% | 28.00% | 28.51% | 0.73% | 0.38% |
| Mirae Asset Midcap Fund | Nifty Midcap 150 TRI | ₹16,576.59 | 31.43% | 28.00% | 27.42% | 0.73% | 0.60% |
*(Data as on November 29, 2024)
Overview of the Top 10 Mid Cap Mutual Funds
Here are the details of the 10 top mid cap mutual funds (as on November 29, 2024):
1. Motilal Oswal Midcap Fund
Motilal Oswal Midcap Fund NAV is ₹123.46. The minimum SIP amount is ₹500 while the lump sum investment is ₹500. The fund’s alpha is 12.02 and beta is 0.84. The top 3 stock allocations of this fund are Coforge, Kalyan Jewellers India, and Vodafone Idea.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Motilal Oswal Midcap Fund would grow to approx ₹1.56 lakhs.
2. Quant Mid Cap Fund
Another best mid cap mutual fund is Quant Mid Cap Fund and its NAV is ₹249.16. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹5,000. The fund’s alpha is 5.01 and beta is 0.95. The top 3 stock allocations of this fund are Reliance Industries, Aurobindo Pharma, and HDFC Bank.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Quant Mid Cap Fund would become more than ₹1.56 lakhs.
3. Edelweiss Mid Cap Fund
Edelweiss Mid Cap Fund NAV is ₹114.99. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 4.06 and beta is 0.91. The top 3 stock allocations of this fund are Persistent Systems, Dixon Technologies (India), and Lupin.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Edelweiss Mid Cap Fund would become around ₹1.46 lakhs.
4. PGIM India Midcap Opportunities Fund
PGIM India Midcap Opportunities Fund NAV is ₹72.17. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹5,000. The fund’s alpha is -4.51 and beta is 0.83. The top 3 stock allocations of this fund are Ashok Leyland, Dixon Technologies (India), and Max Healthcare Institute.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in PGIM India Midcap Opportunities Fund would become approx ₹1.40 lakhs.
5. Mahindra Manulife Mid Cap Fund
Mahindra Manulife Mid Cap Fund NAV is ₹37.54. The minimum SIP amount is ₹500 while the lump sum investment is ₹1,000. The fund’s alpha is 2.45 and beta is 0.99. The top 3 stock allocations of this fund are Persistent Systems, State Bank of India, and Max Healthcare Institute.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Mahindra Manulife Mid Cap Fund would become approx ₹1.38 lakhs.
6. Nippon India Growth Fund
Nippon India Growth Fund, another best mid cap mutual fund, has an NAV of ₹4,415.59. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 3.69 and beta is 0.91. The top 3 stock allocations of this fund are Cholamandalam Financial Holdings, Power Finance Corporation, and Persistent Systems.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Nippon India Growth Fund would become around ₹1.38 lakhs.
7. HDFC Mid-Cap Opportunities Fund
HDFC Mid-Cap Opportunities Fund NAV is ₹205.51. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 5.68 and beta is 0.87. The top 3 allocations of this fund are cash holdings, Max Financial Services, and The Indian Hotels Company.
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By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in HDFC Mid-Cap Opportunities Fund would become approx ₹1.36 lakhs.
8. Invesco India Mid Cap Fund
Invesco India Mid Cap Fund NAV is ₹199.37. The minimum SIP amount is ₹500 while the lump sum investment is ₹1,000. The fund’s alpha is 2.47 and beta is 0.91. The top 3 stock allocations of this fund are The Federal Bank, Max Healthcare Institute, and Trent.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Invesco India Mid Cap Fund would grow to around ₹1.36 lakhs.
9. Kotak Emerging Equity Fund
Kotak Emerging Equity Fund NAV is ₹152.61. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 3.36 and beta is 0.81. The top 3 allocations of this fund are Persistent Systems, Oracle Financial Services Software, and cash holdings.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Kotak Emerging Equity Fund would grow to approx ₹1.32 lakhs.
10. Mirae Asset Midcap Fund
The last in the list of top 10 mid cap mutual funds is Mirae Asset Midcap Fund and its NAV is ₹37.74. The minimum SIP amount is ₹99 while the lump sum investment is ₹5,000. The fund’s alpha is -1.40 and beta is 0.93. The top 3 stock allocations of this fund are Indian Bank, Kalyan The Federal Bank, and Delhivery.
By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Mirae Asset Midcap Fund would become more than ₹1.28 lakhs.
Pros of Mid Cap Mutual Fund
1. Higher Returns than Large Cap Funds
A mid cap mutual fund invests in companies that are in their expansion phase and are working to increase their market share and compete with large-cap companies. Mid-cap companies have a higher return potential in the long run than large-cap ones as they have already come to a saturation point.
2. Less Volatile than Small Cap Funds
Mid cap funds invest in mid-cap stocks which are less volatile as compared to small-cap stocks. Smaller companies are high-risk takers and hold a meager share of the industry. On the other hand, mid-cap companies still have a name in the industry and can withstand volatile markets.
3. Professionally Managed
A mid cap fund is managed by a professional fund manager who selects the best mid-cap stocks and tries to generate benchmark-beating returns. The investor is free from analyzing individual stocks as the fund manager takes up his role.
4. Reduces Company Specific-Risk
While investing in a mid cap mutual fund, the company or industry-specific risk gets reduced. Because these funds invest in companies across different sectors and industries. If one mid-cap stock is falling, then the other stock from another industry will provide the cushion.
5. Ideal for Long Term Investment
Mid cap funds are ideal for long-term investment, such as more than 5 years. This makes the mid cap fund the ideal choice for investors looking to create wealth for retirement or children’s education. In the long run, these funds can generate compound returns and can help in wealth creation.
Cons of Mid Cap Mutual Fund
1. Risky in Fluctuating Market
In uncertain times, mid cap funds can be highly risky as these funds invest in companies that are still at the growing stage. These companies are not fully secure from the turbulent environment and hence the returns of the mid cap funds can fluctuate sharply.
2. Poor Selection of Stocks
The fund manager plays an important role in selecting the best mid-cap stocks and if he fails to analyze the right opportunities and serious threats, then the returns from mid cap funds can be directly hampered.
3. Taxation Rule of Mid Cap Mutual Fund
Once you invest in the best mid cap mutual fund, then you also have to pay a tax on your earnings. LTCG arises after the holding period of 12 months is taxed at a rate of 12.5% (only if earnings are more than ₹1.25 lakhs in a financial year). STCG for a holding period of less than or equal to 12 months is taxed at 20%.
Conclusion
After reading this blog, you are clear about what is mid cap fund. This mutual fund invests the majority of the collected corpus in mid-cap stocks which are expanding and can also significantly increase their market share in the long run. In order to select the top mid cap mutual funds, you can look at past returns and key ratios such as expense ratio and alpha.
But while investing in any mutual fund, it is better to do your research and keep your investment objective in mind. Open Demat account with SMC Global Securities and keep investing in stocks, or mutual funds like a pro.
FAQs
1. What is a mid-cap fund in a mutual fund?
A mid cap fund in a mutual fund arena is a fund that invests highly in mid-cap stocks. These stocks come in the range of 101 to 250 in terms of full market capitalization.
2. Which mid-cap fund is best in India?
Some of the best mid cap funds in India are Motilal Oswal Midcap Fund, Quant Mid Cap Fund, and Edelweiss Mid Cap Fund.
3. Which mid-cap fund gave the highest return?
Motilal Oswal Midcap Fund has generated the highest return of 34.06% in the last 5 years.
References:
https://www.smctradeonline.com/invest/mutual-funds
https://www.mutualfundssahihai.com/en/what-are-mid-cap-funds
Author: All Content is verified by SMC Global Securities.
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