Mid Cap funds primarily invest between 65% to 90% of their assets in mid-cap companies with a market capitalization of ₹10,000 cr, offering a high-risk, high-return investment strategy.
Long Horizon
39 Funds
₹3,95,002 Cr Total AUM
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| Fund name | Fund size | Expense Ratio | 3Y Returns  |
|---|---|---|---|
 Motilal Oswal Midcap Fund Direct Growth Mid-Cap Very High Risk | ₹22,897 Cr | 0.54% | 38.8% |
 HDFC Mid-Cap Opportunities Fund Direct Growth Mid-Cap Very High Risk | ₹76,060 Cr | 0.74% | 30.3% |
 Edelweiss Mid Cap Fund Direct Growth Mid-Cap Very High Risk | ₹8,280 Cr | 0.39% | 29.3% |
 HSBC Midcap Fund Direct Growth Mid-Cap Very High Risk | ₹11,912 Cr | 0.67% | 29.2% |
 Nippon India Growth Fund Direct Growth Mid-Cap Very High Risk | ₹34,583 Cr | 0.79% | 28.8% |
 Invesco India Mid Cap Fund Direct Growth Mid-Cap Very High Risk | ₹5,862 Cr | 0.58% | 28.3% |
 Mahindra Manulife Mid Cap Fund Direct Growth Mid-Cap Very High Risk | ₹3,460 Cr | 0.48% | 28.3% |
 Sundaram Mid Cap Fund Direct Growth Mid-Cap Very High Risk | ₹12,425 Cr | 0.9% | 27.5% |
 ITI Mid Cap Fund Direct Growth Mid-Cap Very High Risk | ₹1,133 Cr | 0.26% | 27.2% |
 Quant Mid Cap Fund Direct Growth Mid-Cap Very High Risk | ₹8,941 Cr | 0.58% | 26.5% |
Identify red flags in your mutual funds and how to fix them
As per SEBI’s classification, mid-cap mutual funds are equity funds that invest a minimum of 65% of their total assets in mid-cap stocks.
Mid-cap companies are ranked 101 to 250 on the stock exchange by market capitalisation. These have the potential to become the next large-cap companies in the future.
Since mid-cap mutual funds fall between the large and small-cap categories, they have certain advantages. Mid-cap funds have the potential to generate higher returns than large-cap funds but are more volatile.
Midcap mutual funds have shown impressive performance in the past, outperforming both large-cap and small-cap funds over various time periods.
| Benchmark | 3Y | 5Y | 10Y |
| Nifty 100 | 19.85% | 14.56% | 14.35% |
| Nifty Midcap 100 | 33.94% | 20.94% | 20.08% |
| Nifty Smallcap 100 | 30.59% | 17.90% | 17.54% |
Source: https://www.advisorkhoj.com/mutual-funds-research/mutual-fund-benchmark-monitor
Mid-cap mutual funds have a higher exposure towards sectors that have promising growth potential. Companies belonging to these sectors benefit from disruptive technologies and thus offer good returns.
Mid-cap funds are more volatile than large-cap funds. Volatility is the rate at which the stock prices increase or decrease over a particular period. In volatile market scenarios, caps tend to deviate higher than large caps. However, the volatility of mid-cap funds is lower than small-cap funds.
Standard deviation in mutual funds depicts their volatility. The higher the standard deviation, the higher the volatility of the index.
The below table shows the standard deviation of the Nifty 100, Nifty Midcap 100 and Nifty Small-cap 100.
| Standard Deviation (SD) | 1Y | 5Y |
| Nifty 100 | 10.30% | 18.94% |
| Nifty Midcap 100 | 12.49% | 20.50% |
| Nifty Smallcap 100 | 14.14% | 21.80% |
Note: The SD values are as of 29th September 2023 and are annualised.
When investing in equity schemes, having a long-term perspective is important. In the short term, like a year or two, stocks are highly volatile.
If you want to see your money grow significantly, it's best to think long-term when investing in mid-cap mutual funds.
Let's look at the rolling returns for the Nifty 100, Nifty Midcap 100, and Nifty Smallcap 250.
| Index | 1Y | 2Y | 3Y | 5Y | 7Y | 10Y |
| Nifty 100 | 17.80% | 9.57% | 1.55% | 0.11% | 0% | 0% |
| Nifty Midcap 100 | 29.98% | 21.96% | 13.36% | 0.78% | 0% | 0% |
| Nifty Smallcap 250 | 39.85% | 30.41% | 20.50% | 3.59% | 0% | 0% |
Source: Advisorkhoj
The table above captures the probability of each index giving negative returns over the specified durations. Midcaps have a high probability of generating negative returns in the short term (1Y, 2Y and 3Y), and in the long term, the returns keep improving.
Thus proving that midcap funds are not suitable for the short term.
Well, the answer depends on your risk appetite and portfolio diversification strategies. It is advisable to consult your financial advisor before investing in mid-cap funds. The advisor will analyse your portfolio holdings and determine the right allocation for you.
However, here are some reasons why you should invest in mid-cap index funds:
Note: The above information is for educational purposes only. It is best to consult a financial advisor before making investment decisions.
Since mid-cap companies are less established than large-cap companies, they are more volatile. Thus, mid-cap funds are subject to higher market volatility during economic turmoil. However, they are less riskier than small-cap funds.
The main difference is their investment universe. Large-cap funds invest 80% of the assets in the top 100 companies by market capitalisation.
Mid-cap funds invest 65% of the assets in the top 101 to 250 companies by market capitalization. Small-cap funds invest 65% of the assets in companies ranking above 250th in terms of market capitalization.
In terms of risk, small-cap funds have the highest risk, followed by mid-cap funds. Large-cap funds are considered to be low-risk as they invest in the top companies in the industry.
Capital gains from mid-cap mutual funds are taxed based on the investment holding period. Short-term capital gains (where the investment holding period is less than 1 year) are taxed at 15%. On the other hand, long-term capital gains above Rs 1 lakh (where the investment holding period is more than 1 year) are taxed at 10%.
Since mid-cap funds invest in equities, you need to have a long-term investment horizon. Ideally, a minimum of 5 to 7 years is advised when investing in mid-cap funds.
Yes. In the long term (historically), mid-cap funds have generated inflation-beating returns.
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Hybrid funds are a combination of equity and debt investments. The blend of these asset classes varies based on the fund's investment goals.
Debt Mutual Funds invest in fixed-income securities such as government bonds, corporate bonds, treasury bills, and other money market instruments.
