What is Mid-Cap Mutual Funds?

As the name states, mid-cap mutual funds are those which are invested in stocks of mid-sized companies with medium-market capitalizations. Context to this, the specific word ‘cap’ refers to the size of the listed company or to the market capitalization (that ranges between INR 500 crore to INR 10000 crore). Also, the size of a company is an important criterion whilst selecting equity portfolios reason being, the portfolio would have its unique set of risks and opportunities depending on the size of the company.

What are The Best Midcap Mutual Funds to Invest

• Past Performance Is No Guarantee of Future Results

 

Mid cap mutual fund schemes invest in stocks of mid-sized companies or stock with medium market capitalizations. The market capitalization ranges from Rs 500 cr to Rs 1000 cr. The company size is an essential criterion while selecting the equity portfolio as it provides unique sets of opportunity and risk to their investor. Mid cap mutual fund scheme invests in mid-sized companies that have the potential to become large companies.

Who Should Invest in Mid-Cap Mutual Funds?

 

Investors who are looking for better growth and high-risk appetite for risks as compared to large cap funds should invest in mid cap mutual funds. If investors are happy to go with the flow of volatility of stocks, then mid-cap mutual funds it is.

NOTE: Mid-sized companies tend to provide steep growth and faster earnings whilst being volatile on the stock index.

Why Invest in Mid Cap Mutual Funds with Gulaq

•  Seamless Onboarding & Execution:

We cut out Paper and Jargon. We do everything digitally – from KYC to execution. Your experience with Gulaq will be simple, easy to understand, hassle-free and all-online. (By the way – NO SALES CALLS)

 

• Quantitatively Optimized

We are committed to using our decades of experience for your benefit. Profoundly researched mutual funds. Rooted recommendations. Market tested. Reliable advice for you from expert’s algorithms.

 

• Transparent and Fair

No nasty surprises! No commissions, we sell only direct, zero commission mutual funds. Our incentives are always the same as yours. We always optimize your portfolio for the best returns. We have got you covered.

 

• Secure and Private

Complete privacy and security of data. With the promise of never sharing your data with any third party for advertising, marketing or for any other reason without your consent.

What are The Key Points To Be Consider as An Investor to Invest in Mid Cap Mutual Funds?

Before investing in Mid cap Mutual funds, there are certain things investor needs to keep up in mind.

• Mid-caps tend to be more volatile and see greater price movement as compared to large cap. They perform very well in the bull, but they tend to plunge in value when the market sentiment is going down.

• They also suffer from liquidity constraints due to their capital base. Since the underlying shares are characterized by lower market capitalizations and limited liquidity, these funds tend to follow the cycle of boom and bust.

• Most investors look at the past performance and short-term performance of a fund and they go ahead with their investment decision. This is one of the biggest fallacies. An investor needs to understand how and why has fund delivered the respective return.

How To Evaluate Your Mid Cap Mutual Funds?

 

There are various ways to evaluate your Mid Cap Mutual Funds. Take a closer look at the basis of various parameters:

• Performance and risk analysis.

This is one of the most important metrics to analyse your mid cap mutual funds. If the mid cap has shown consistency in performance across various market periods with calculated risk adjusted returns. Before investing make sure to check what was the fund performance during the short term and long-term periods such as 1 year, 3 years and 5 year, depending upon the risk- reward ratios like Sharpe Ratio, Sortino Ratio and Standard Deviation.

• Performance across Market Cycles:

An investor before investing make sure to check, whether the fund can perform consistently across different market cycles. Before investors Invest in Mid Cap Mutual Funds one should compare the performance of all the available mid cap funds vis-a-vis their benchmark index across bull phases and bear phases.

• Assessment of Portfolio Quality:

The investor must access their portfolio should be well diversified and the exposure to the top 10 holdings should be ideally under 50%. Also, from the investor point of view, make sure to note down the portfolio turnover ratio and expenses as well as fund manager performance over a time. Further make sure to ensure that the mutual fund house has a track record of consistent performance over different schemes.

Frequently Asked Questions