Is Mid-Cap Mutual Fund the Best?

The topic that we will talk today is very important and interesting for new investors: mid-cap mutual funds. This will work really well for you if you are investing in the mutual funds for the first time.

Typically we invest in mutual funds through our friends, bank or agency references. But this is the wrong way to do it. It is always better to invest based on right information and your own calls. Today, we are here to assist you with just that.

But I would suggest some more articles about mutual funds:

➡ How to find Best Mutual Funds in 2024?

➡ SIP vs. Lump Sum: Do not make mistake in 2024!

What is Mid Cap Mutual Fund?

Mid-cap mutual funds are those which have a portfolio investing in medium-sized or midcap companies.

Mid-cap Companies: Mid Cap companies refers to companies with a market capitalization of ₹500 crore & up-to ₹10,000 crores.

The words of the Securities and Exchange Board of India (SEBI) are feet mutual funds, this means that companies from market 101 to 250 can be invested in mid cap companies.

Advantages and Disadvantages of Mid-Cap Mutual Funds

Advantage 1: The change in the price from time to time, being added (or subtracted) from the market valuation is more impactful than that of large-cap funds.

Disadvantage 1: As market value declines, the fall in the mid-cap funds is more than large-cap funds.

Another difference you would encounter is whether to invest in large-cap funds or mid-cap funds.

Advantage 2: Mid-cap schemes are less risky as compared to small-cap funds.

Disadvantage 2: However, risk is higher in the case of mid-cap funds as compare to large cap.

Advantage 3: Large-cap funds are good, but mid-cap funds are better.

Disadvantage 3: Compared to small-cap funds, mid-cap funds offer relatively fewer benefits.

Who Should Invest?

For investors with aversion to risk, 20% should be maximum allocation for mid-cap funds. For those willing to take higher risk, mid-cap funds can be allotted up to 40% of the target investment.

Ideal allocation: invest 60% in Large cap funds and remaining 40% in Mid-cap funds.

First focus on the large cap funds It gives you space to understand the market better and then slowly start moving money towards mid-cap or small caps fund

Avoid mid-cap or small-cap funds, where it is a risk to invest when you cannot follow the market.

A List of Good Mid-Cap Mutual Funds

You can find a high returns list of mid-cap funds on apps like Zerodha, Paytm Money, and Angel Broking. However, while reviewing the list, focus on their interest or return rates.

Before investing, check the market value and the growth rate of the business over the past two years. Additionally, learn about the company’s operational efficiency.

Some popular mid-cap mutual funds include:

1. Axis Mutual Fund
2. DSP Mutual Fund
   These are my personal favorites due to their consistent good returns and experienced fund managers.

Two other excellent funds are:

1. Nippon India Mutual Fund
2. Kotak Mutual Fund
   These funds have also shown great performance over the years.

Conclusion

Know how to invest in mid-cap mutual funds, should you choose to take the risk with them. But make sure you know the market well, and plan properly — invest only after that. To conclude, hopefully you have a clarity about midcap funds after reading this article.

Be smart with your investment, we are here for you.