Investing in the Future: Top Mid-Cap Mutual Funds of 2021 for Potential Growth and Returns

April 10, 2023

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Top Mid-Cap Mutual Funds of 2021: Unlocking Growth Potential

Introduction: When it comes to mutual fund investments, mid-cap funds have gained significant popularity among investors in recent years. Mid-cap mutual funds invest in companies with a market capitalization that falls between large-cap and small-cap companies. These funds are known for their potential to deliver higher returns compared to large-cap funds while also offering some degree of risk. In this blog, we will explore the top mid-cap mutual funds of 2021 that have shown consistent performance and have the potential to unlock growth for investors.

Understanding Mid-Cap Mutual Funds

Before we delve into the top mid-cap mutual funds of 2021, let’s understand what mid-cap mutual funds are and how they work. Mid-cap mutual funds are a type of equity mutual fund that invests in stocks of mid-sized companies with market capitalizations typically ranging between Rs. 5,000 crore and Rs. 20,000 crore. These companies are relatively smaller than large-cap companies but have higher growth potential compared to large-caps. Mid-cap mutual funds are considered to be a good option for investors who are looking for higher returns than large-cap funds but are willing to take on some degree of risk.

Factors to Consider While Choosing Mid-Cap Mutual Funds

Choosing the right mid-cap mutual fund is crucial for investors to achieve their financial goals. Here are some factors that investors should consider while selecting mid-cap mutual funds:

Past Performance: It’s important to assess the historical performance of a mid-cap mutual fund before investing. Look for funds that have consistently delivered returns above the benchmark index and peers over the long term, typically 3-5 years.
Fund Manager’s Track Record: The fund manager plays a crucial role in the performance of a mutual fund. Research the experience and track record of the fund manager in managing mid-cap funds and their investment philosophy.
Expense Ratio: The expense ratio of a mutual fund impacts the returns earned by investors. Lower expense ratios are preferable as they leave more money invested in the fund, resulting in potentially higher returns.
Risk Profile: Mid-cap mutual funds are known for their higher risk compared to large-cap funds. Evaluate the risk profile of the fund and align it with your risk tolerance and investment objectives.
Fund House Reputation: Choose mid-cap mutual funds from reputable fund houses that have a proven track record of managing mutual funds and have a good reputation in the market.

Top Mid-Cap Mutual Funds of 2021

Here are some of the top mid-cap mutual funds of 2021 that have delivered impressive performance:

Axis Midcap Fund: This fund has consistently delivered excellent returns and has outperformed its benchmark and peers over the long term. The fund follows a growth-oriented investment approach and invests in high-growth mid-cap companies with the potential to generate higher returns.
Kotak Emerging Equity Scheme: This fund has a proven track record of delivering consistent returns and has been one of the top performers in the mid-cap category. The fund invests in a diversified portfolio of mid-cap companies with strong growth prospects and is managed by an experienced fund manager.
SBI Magnum Midcap Fund: This fund has a long history of delivering impressive returns and has consistently outperformed its benchmark and peers. The fund follows a bottom-up stock picking approach and invests in mid-cap companies with strong fundamentals and growth potential.
HDFC Mid-Cap Opportunities Fund: This fund has a strong track record of delivering consistent returns and is managed by an experienced fund manager. The fund follows a blend of growth and value style of investing and invests in companies with strong competitive advantages and growth prospects.

5. DSP Midcap Fund: DSP Midcap Fund is known for its consistent performance and has been one of the top mid-cap mutual funds in the market. The fund follows a focused investment approach and invests in a concentrated portfolio of mid-cap companies with high growth potential. The fund’s investment strategy focuses on identifying companies with strong competitive advantages, scalable business models, and robust financials.

Aditya Birla Sun Life Mid Cap Fund: This fund has a proven track record of delivering impressive returns and has been a top performer in the mid-cap category. The fund follows a blend of growth and value investing approach and invests in mid-cap companies with sound management, sustainable business models, and growth prospects. The fund’s portfolio is diversified across sectors, aiming to capture opportunities across different segments of the mid-cap universe.
Invesco India Mid Cap Fund: This fund has delivered consistent performance and has outperformed its benchmark and peers over the long term. The fund follows a bottom-up stock picking approach and focuses on investing in companies with high growth potential and attractive valuations. The fund’s portfolio is well-diversified across sectors and has a mix of growth and value-oriented stocks.
Franklin India Prima Fund: This fund has a long history of delivering impressive returns and has been a top performer in the mid-cap category. The fund follows a multi-cap approach and invests in mid-cap companies with a strong competitive advantage, sustainable business models, and growth potential. The fund’s investment strategy focuses on identifying companies with a margin of safety and long-term wealth creation potential.
IDFC Mid Cap Fund: This fund has shown consistent performance and has been a preferred choice among investors looking for mid-cap exposure. The fund follows a combination of top-down and bottom-up approach and invests in companies with high growth potential, competitive advantages, and strong financials. The fund’s portfolio is well-diversified across sectors and has a blend of growth and value-oriented stocks.

Conclusion:

Mid-cap mutual funds have the potential to unlock growth for investors by investing in mid-sized companies with higher growth prospects. However, it’s crucial to carefully evaluate various factors such as past performance, fund manager’s track record, expense ratio, risk profile, and fund house reputation before investing in mid-cap mutual funds. The above-mentioned top mid-cap mutual funds of 2021 have a proven track record of delivering consistent performance and can be considered by investors who are willing to take on some degree of risk in pursuit of higher returns. As with any mutual fund investment, it’s advisable to consult with a financial advisor and carefully assess your risk tolerance and investment objectives before making any investment decisions.

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Frequently Asked Questions (FAQs)

What are mid-cap mutual funds?
Mid-cap mutual funds are mutual funds that invest in companies with medium market capitalization, typically ranked between large-cap and small-cap companies. These companies are considered to be in a growth phase with the potential for higher returns but also come with higher risks compared to large-cap companies.

What is the risk associated with mid-cap mutual funds?
Mid-cap mutual funds are considered to be moderately risky as they invest in mid-sized companies that may have higher volatility compared to large-cap companies. These funds are exposed to market fluctuations and may experience higher ups and downs in their performance.

How do I choose the best mid-cap mutual fund?
When choosing a mid-cap mutual fund, factors to consider include past performance, fund manager’s track record, expense ratio, risk profile, and the reputation of the fund house. It’s important to research and analyze these factors to make an informed decision.

What are the potential returns from mid-cap mutual funds?
Mid-cap mutual funds have the potential to deliver higher returns compared to large-cap mutual funds over the long term. However, the returns are subject to market fluctuations and the performance of the underlying companies in the fund’s portfolio.

What is the ideal investment horizon for mid-cap mutual funds?
Mid-cap mutual funds are typically recommended for investors with a medium to long-term investment horizon of at least 5-7 years or more. These funds require a longer investment horizon to potentially capture the growth potential of mid-sized companies.

Are mid-cap mutual funds suitable for risk-averse investors?
Mid-cap mutual funds are considered moderately risky and may not be suitable for risk-averse investors who prioritize capital preservation. These funds are more suitable for investors with a higher risk tolerance and willingness to accept market fluctuations.

Can I invest in mid-cap mutual funds through SIPs (Systematic Investment Plans)?
Yes, many mid-cap mutual funds offer the option of investing through SIPs, which allows investors to invest in smaller amounts at regular intervals. SIPs can be a convenient way to invest in mid-cap mutual funds and benefit from the power of compounding.

Can I switch from large-cap to mid-cap mutual funds or vice versa?
Yes, investors have the option to switch between different types of mutual funds, including large-cap and mid-cap funds, based on their investment objectives and market outlook. However, it’s important to carefully assess the risks and consult with a financial advisor before making any switch.

What are the tax implications of investing in mid-cap mutual funds?
Mid-cap mutual funds are subject to capital gains tax, which depends on the holding period. Short-term capital gains (holding period less than 1 year) are taxed at the individual’s applicable income tax slab rate, while long-term capital gains (holding period more than 1 year) are taxed at 10% (without indexation) or 20% (with indexation), whichever is lower.

How can I track the performance of mid-cap mutual funds?
You can track the performance of mid-cap mutual funds through various financial websites, mutual fund aggregators, or the fund house’s official website. The fund’s performance can be evaluated based on its historical returns, benchmark comparison, and risk-adjusted performance. It’s important to review the fund’s performance periodically and make necessary adjustments to your investment portfolio as needed.