The mutual fund market in India has been on a steady rise, with investors seeking opportunities to diversify their portfolios and achieve long-term wealth creation. Mid cap mutual funds, which invest in companies with a medium market capitalization, have gained popularity among investors due to their potential for higher returns compared to large cap funds, and lower risk compared to small cap funds. In this blog, we will explore the best mid cap mutual funds of 2021 that have shown consistent performance and have the potential to deliver significant returns.
Understanding Mid Cap Mutual Funds
Mid cap mutual funds are a category of mutual funds that invest in companies with a market capitalization that falls between large cap and small cap companies. These funds are known for their ability to generate higher returns compared to large cap funds, as mid cap companies are considered to have higher growth prospects. However, they also come with a higher risk compared to large cap funds, as mid cap companies may be more volatile and sensitive to market fluctuations.
Factors to Consider While Selecting Mid Cap Mutual Funds
When selecting mid cap mutual funds, it is important to consider various factors to make an informed decision. Some of the key factors to consider are:
- Past Performance: Look for mid cap mutual funds that have a consistent track record of delivering superior returns compared to their benchmark and peers over a period of time, such as 3, 5, or 10 years.
- Fund Manager’s Expertise: Assess the experience and expertise of the fund manager who manages the mid cap mutual fund. A skilled and experienced fund manager can make a significant impact on the performance of the fund.
- Fund Size: Consider the size of the mid cap mutual fund, as larger funds may face challenges in deploying funds effectively and may have limitations in generating high returns.
- Expense Ratio: Look for mid cap mutual funds with a low expense ratio, as higher expenses can erode the overall returns of the fund over time.
- Risk Profile: Understand the risk profile of the mid cap mutual fund, as mid cap companies can be more volatile compared to large cap companies. Consider your risk tolerance and investment objectives before investing in mid cap funds.
Best Mid Cap Mutual Funds of 2021
Based on the aforementioned factors, here are some of the best mid cap mutual funds of 2021:
- Axis Midcap Fund: This fund has consistently delivered superior returns compared to its benchmark and peers over the years. Managed by experienced fund managers, the Axis Midcap Fund has a well-diversified portfolio of mid cap companies with a focus on growth-oriented sectors.
- SBI Magnum Midcap Fund: With a strong track record of delivering consistent returns, the SBI Magnum Midcap Fund has been a popular choice among investors. The fund has a diversified portfolio of mid cap companies across various sectors, and its experienced fund managers follow a bottom-up stock picking approach.
- DSP Midcap Fund: Known for its disciplined investment approach and consistent performance, the DSP Midcap Fund has been a top performer in the mid cap category. The fund has a well-diversified portfolio of mid cap companies with a blend of growth and value-oriented stocks.
- Kotak Emerging Equity Fund: This mid cap fund has a strong focus on quality mid cap companies with a potential for growth. The fund follows a research-driven investment approach and has consistently outperformed its benchmark and peers over the years.
- HDFC Mid-Cap Opportunities Fund: Managed by experienced fund managers, the HDFC Mid-Cap Opportunities Fund has a proven track record of delivering consistent returns. The fund has a diversified portfolio of mid cap companies with a focus on quality and growth-oriented stocks.
- Invesco India Mid Cap Fund: This mid cap fund has a history of delivering superior returns and has been recognized for its consistent performance. The fund follows a research-driven approach and has a well-diversified portfolio of mid cap companies across sectors.
- Aditya Birla Sun Life Mid Cap Fund: Known for its strong focus on risk management and long-term wealth creation, the Aditya Birla Sun Life Mid Cap Fund has been a preferred choice among investors. The fund has a diversified portfolio of mid cap companies with a blend of growth and value-oriented stocks.
- Canara Robeco Emerging Equities Fund: This mid cap fund has a track record of delivering consistent returns and follows a bottom-up stock picking approach. The fund has a well-diversified portfolio of mid cap companies with a focus on quality and growth-oriented stocks.
- Franklin India Prima Fund: Managed by experienced fund managers, the Franklin India Prima Fund has been a popular choice among investors seeking exposure to mid cap companies. The fund follows a research-driven approach and has a diversified portfolio of mid cap companies with a focus on value-oriented stocks.
- IDFC Mid Cap Fund: This mid cap fund has a disciplined investment approach and aims to invest in high-quality mid cap companies with a potential for growth. The fund has delivered consistent returns and has a well-diversified portfolio across sectors.
Conclusion
Mid cap mutual funds can be an attractive investment option for investors seeking higher returns compared to large cap funds, while being willing to accept a higher level of risk. However, it is crucial to carefully evaluate various factors such as past performance, fund manager’s expertise, fund size, expense ratio, and risk profile before investing in mid cap mutual funds.
The above-mentioned mid cap mutual funds, including Axis Midcap Fund, SBI Magnum Midcap Fund, DSP Midcap Fund, Kotak Emerging Equity Fund, HDFC Mid-Cap Opportunities Fund, Invesco India Mid Cap Fund, Aditya Birla Sun Life Mid Cap Fund, Canara Robeco Emerging Equities Fund, Franklin India Prima Fund, and IDFC Mid Cap Fund, have shown consistent performance and have the potential to deliver significant returns. However, it is important to consult with a financial advisor and carefully assess your investment goals, risk tolerance, and financial situation before making any investment decisions.
Investing in mutual funds carries risks, and past performance is not indicative of future results. It is essential to thoroughly research and understand the risks associated with mid cap mutual funds and make informed investment decisions. Always read the scheme documents, including the offer document, and consult with a financial professional for personalized investment advice.
In conclusion, mid cap mutual funds can be a valuable addition to an investment portfolio for investors looking to diversify and potentially earn higher returns. However, careful research, due diligence, and professional advice are necessary to make informed investment decisions. Stay updated with the performance and management of the mutual funds and periodically review your investments to ensure they align with your investment goals and risk tolerance. Happy investing!
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Frequently Asked Questions (FAQs)
What are mid cap mutual funds?
Mid cap mutual funds are mutual funds that primarily invest in companies with medium market capitalization, which typically fall between large cap and small cap companies. These funds aim to provide investors with potential higher returns compared to large cap funds, but also come with a higher level of risk.
What is the ideal investment horizon for mid cap mutual funds?
The ideal investment horizon for mid cap mutual funds is typically considered to be at least 5-7 years or more. Since mid cap companies may be more volatile compared to large cap companies, it is important to have a longer investment horizon to ride out market fluctuations and potentially earn higher returns.
What are the risks associated with mid cap mutual funds?
Mid cap mutual funds come with higher risks compared to large cap funds. The risks associated with mid cap mutual funds include market volatility, higher stock-specific risks, and liquidity risks. The value of investments in mid cap funds may fluctuate based on market conditions and the performance of underlying mid cap stocks.
How to choose the right mid cap mutual fund?
When choosing a mid cap mutual fund, investors should consider factors such as past performance, fund manager’s expertise, fund size, expense ratio, risk profile, and investment objective. It is important to thoroughly research and compare different mid cap funds before making an informed investment decision.
Can mid cap mutual funds be suitable for conservative investors?
Mid cap mutual funds are generally considered to be suitable for investors with a higher risk tolerance and a longer investment horizon. Conservative investors who are not comfortable with higher risks may consider other options such as large cap or balanced funds, which typically have lower risk profiles.
What is the expense ratio of mid cap mutual funds?
The expense ratio of mid cap mutual funds typically varies from fund to fund and includes charges such as fund management fees, administrative expenses, and other operational costs. It is important to understand the expense ratio and its impact on the overall returns of the fund before investing.
Can mid cap mutual funds be used for diversification?
Yes, mid cap mutual funds can be used as a part of diversification strategy in an investment portfolio. Mid cap funds can provide diversification benefits by adding exposure to companies with medium market capitalization, which may have different growth prospects compared to large cap or small cap companies.
How often should I review my mid cap mutual fund investments?
It is recommended to periodically review your mid cap mutual fund investments, at least once a year or as per your individual investment goals and risk tolerance. Regular reviews can help you assess the performance of the fund, the fund manager’s strategy, and make necessary adjustments to your portfolio.
Can I invest in mid cap mutual funds through SIP (Systematic Investment Plan)?
Yes, investors can invest in mid cap mutual funds through SIP (Systematic Investment Plan), which allows for regular investments in the fund at fixed intervals. SIP can help investors in disciplined investing and averaging out the cost of investments over time, reducing the impact of market volatility.
Are mid cap mutual funds suitable for short-term investments?
Mid cap mutual funds are generally not recommended for short-term investments, as they are considered to be more suitable for long-term investment horizons. Short-term investments are subject to higher market risks and volatility, and mid cap funds may not be ideal for short-term goals.
