As the name says, midcap funds invest in stocks with medium market capitalizations or stocks of mid-sized companies. Over here, the word ‘cap’ refers to the size of the listed company or the market capitalization (ranging between – INR 500 crore – INR 10000 crore). The size of the company is an important criterion whilst selecting equity portfolios because depending on the company size the portfolio would have its unique set of risks and opportunities.
WHO SHOULD INVEST IN MIDCAP MUTUAL FUNDS?
Investors who are looking for growth and high-risk appetite for risks as compared to those of largecap funds should go for these funds. Apparently, mid-sized companies happen to provide good earnings and steep growth whilst being volatile on the stock-index. Investors who are ready to live with the volatility of stocks providing good returns should opt for midcap funds.
ADVANTAGES OF MIDCAP MUTUAL FUNDS
If we are considering a long-term history of mutual funds, then midcap funds have consistently performed well. In fact, the nature and trend of these funds are not likely to change that soon.
The midcap funds are relatively underfollowed in stock markets if compared with large cap funds. This provides the investor(s) with a good opportunity to seek faster growth in their investments using midcap funds.
THINGS TO CONSIDER
Although midcap funds perform well enough in bull runs, still they tend to plunge in value, especially when the market sentiment is dipping. Due to their small capital base, midcap stocks suffer from liquidity constraints.
Since, the underlying shares are characterized by limited liability and lower market capitalizations, these funds end-up following cycle of boom & dip.
RISE OF SMALL & MDCAP FUNDS
| 2017 Returns | |
| Sensex | 27.90% |
| BSE | 35.90% |
| Large Cap Funds | 32.50% |
| Midcap Funds | 45.60% |
| Smallcap Funds | 57.90% |
Source: cleartax.in
TOP 3 BEST MIDCAP FUNDS 2019
As per Gulaq methodology, here:
| Fund Name |
| Axis Midcap Fund(G) – Direct Plan |
| Invesco India Midcap Fund(G) – Direct Plan |
| Tata Midcap Growth Fund(G) – Direct Plan |
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*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.