Aditya Birla Capital
ABC Home
Loans
Investments
Insurance
Payments
Download ABCD

Experience finance made simple on the new ABCD app!

Scan to Download the App

Playstore Appstore
1800-270-7000

Aditya Birla Sun Life AMC Limited

Aditya Birla Sun Life AMC Limited

    Our Menu
    Invest with Us
    Metaverse

    Aditya Birla Sun Life AMC Limited

    Mid Cap Funds – Mid Cap Mutual Funds to Invest in 2023

    Mid Cap Funds

    Investing in Retail investors can often be overwhelmed by the range of mid-cap equity fund options available. Mid-cap funds are open-ended equity funds with portfolio asset allocation of at least 65% into equities of mid-cap companies. SEBI (Securities and Exchange Board of India) guideline states that these are companies ranked from 101 to 250 in terms of market capitalisation in the stock exchanges. In other words, these lie between large-cap and small-cap stocks.

    How Does a Mid-Cap Fund Work?

    Mid-cap equity funds invest a major portion of their corpus amount in the stocks of mid-cap companies. These are some of the country’s fastest-growing companies with a strong potential to increase their market capitalisation in the future.

    Mid-cap companies are famous for growing faster than many blue-chip companies, especially when the economy is in a growth phase. As a result, a fund investing majorly in these companies can provide high return potential during the bull run of the stock market.

    While the funds may have more volatility than the large-cap funds, they carry lower risk than the more volatile small-cap funds.

    Who is Mid-Cap Fund For?

    • • Long-Term Investors

      Mid-cap companies are likely to experience a significant impact on their finances during a financial crisis. As a result, a fund investing in these companies can take time to recover from an economic slowdown.

      However, if you can stay put for 5-10 years or more, mid-cap funds can help you optimise your return potential.


    • • Investors with Moderately High-Risk Tolerance

      Mid-cap companies can be riskier than blue-chip companies. However, top mid-cap equity funds can come with higher return potential than their large-cap counterparts in a bull market or when the market recovers.

      Therefore, mid-cap equity funds are better suited for investors with a moderately high-risk appetite.


    • • Investors Willing to Ride Market Volatilities

      Stock markets never go up or down in a straight line. So, it’s normal for a market-linked portfolio to lose value during a bear run and regain it during the upward cycle. This short-term volatility can be more visible in a mid-cap fund.

      Therefore, invest in mid-cap equity funds if you can stay calm during such market volatility, even when your portfolio may experience a temporary drop in value.

    Investing in Mid-Cap Equity Funds

    Online is the quickest and most hassle-free way to invest. First, select the mid-cap fund you want to buy. Next, choose between growth and IDCW and finally, the investment route (SIP or lumpsum). Once you have made these decisions, set up your account and start investing.

    6 Things to Consider When Investing in Mid-Cap Equity Funds

    • 1. Investment Objective

      Every investor can have different financial goals. So, it’s vital to understand your investment objective and choose the right mid-cap funds accordingly. Also, read the Scheme Information Document (SID) to understand the fund's investment objective and ensure it aligns with your financial goals.

    • 2. Risk Exposure

      Estimate your risk tolerance before investing in these funds. Start with simple questions like

      - How much money can you invest?
      - Will you need the money after 5 months or 5 years?
      - If the market crashes tomorrow, would you panic or stay calm?
      - How much loss can you bear without affecting your finances?

      The above questions can help create a risk profile for yourself and evaluate the amount you can invest in these funds.

    • 3. Total Expense Ratio (TER)

      It is the fee charged by fund houses for managing a mutual fund scheme. SEBI has set a maximum limit of 2.25% that a fund house can charge as TER on equity funds. While a low expense ratio is desirable, consider other factors, like the fund manager's performance, track record, etc., before finalising a mutual fund.

    • 4. Exit Load

      If an investor exits a fund before a specific period, the fund house levies a penalty by deducting a percentage of the invested amount as exit load. While you should invest in mid-cap funds for the long term, you may need to liquidate the funds much before. Therefore, check the offer document carefully for the exit load percentage and the period.

    • 5. Fund Manager’s Experience

      A fund manager's investment decisions directly affect a fund's performance. And more so in a mid-cap mutual fund that experiences higher volatility than a large-cap fund. So, it's important to know the fund manager running a mutual fund. Look for the fund manager's qualifications, fund management experience, and other credentials before investing in mid-cap mutual funds.

    • 6. Fund's Historical Performance

      While a fund's performance in the past doesn't guarantee its future, it certainly helps to gauge its future return potential. For example, top mid-cap equity funds can have a distinctive investment style. Moreover, they can show a certain degree of consistency in terms of returns. For example, a good mid-cap fund may provide relatively stable returns compared to a poorly performing fund over the same period.

      However, it's important to compare over the same parameters. For example, you may get an inaccurate picture if you compare a mid-cap fund following the Nifty midcap 50 with one following the Nifty 50.

    FAQ's

     

    Mid-cap funds are equity mutual funds that predominantly invest in equities of mid-cap companies. These companies sit in between large-cap and small-cap stocks on the stock exchange. Less risky than small-cap funds and carrying higher-return potential than large-cap mutual funds, they offer a good mix of risk and return potential.

    While you should usually keep a long-term investment horizon for these funds, the term should depend on your goals and risk profile. For instance, if, after a few years, your risk profile has changed from high risk to conservative, it may be prudent to exit from these funds.

    Mid-cap equity can be considered riskier than large-cap funds, but it's lower than small-cap funds. However, they do come with moderately high risk. If you want to invest in mid-cap funds but wish to hedge your risks, consider investing in those where the rest of the fund's portfolio is invested into debt instruments or comparatively less volatile large-cap stocks.

    List of Funds in Mid Cap Fund

    RESET

    *Select Category. You can change the field basis your investment objective.

    Here’s what we found for you You can compare up to 3 funds.

    Sort By
    Funds are bucketed on various parameters.
    *Annualized returns are displayed for 1 year and above.
    View All Funds

    Popular Searches

    Debt Fund Equity Fund ETF Hybrid Fund Funds of Funds Index Funds ELSS Fund (Tax Saving ) Types of Equity Funds

    Benefits of Equity SIP What is Equity SIP? How to choose Equity Fund? Mutual Funds What is Mutual Fund What is SIP What is NAV