In the previous article, we discussed the top 10 large-cap mutual funds in India. In this article, we will discuss the top 10 midcap mutual funds in India.
A mid-cap fund is a fund that invests majorly in mid-cap companies as per market capitalization. As per SEBI regulations, a mid-cap fund is required to invest a minimum of 65% of its assets in mid-cap companies through equity.
Advantages:
- High Growth Opportunity: Companies in these funds have a high growth opportunity because of their size and operations. The companies have the potential to become large-cap companies in the future.
- Diversification: These funds provide a good diversification in your portfolio by spreading the risk across market capitalization companies
Top 10 mid-cap mutual funds
| S.No. | Fund Name | 3-Yr Annualized Performance |
| 1 | PGIM India Mid-cap Opportunities Fund Direct Plan-Growth | 34.66 % |
| 2 | Quant Mid Cap Fund-Growth Option Direct Plan | 32.87 % |
| 3 | SBI Magnum Mid Cap Fund Direct-Growth | 25.55 % |
| 4 | Motilal Oswal Midcap 30 Direct Growth | 24.46 % |
| 5 | Edelweiss Mid Cap Fund Direct Plan-Growth Option | 24.39 % |
| 6 | Kotak Emerging Equity Scheme Direct-Growth | 23.33 % |
| 7 | UTI Mid Cap Fund-Growth Option Direct | 23.06 % |
| 8 | Mahindra Manulife Mid Cap Unnati Yojana Direct Growth | 22.66 % |
| 9 | Baroda BNP Paribas Mid Cap Fund Direct Plan Growth Option | 22.06 % |
| 10 | Axis Mid Cap Fund Direct Plan-Growth | 22.05 % |
Source: Morningstar
1. PGIM India Mid-cap Opportunities Fund Direct Plan-Growth – Midcap mutual fund
Fund analysis:
The fund has outperformed the category and the benchmark with good margins. The fund is investing predominantly in mid-cap companies. The fund is rated 5-star by Morningstar. The risk grade is above average, and the returns grade is high.
The fund follows a growth style of investing. The risk is spread across companies with the top 10 holdings consisting of 35.25%. The fund has a high risk (measured by standard deviation) than the category average.
| Pros | Cons |
| A top performer in its category. The fund captured the market well when it was rising and falling, better than the category average. | The minimum monthly SIP amount is Rs 1000/- thus marginal investors may not be able to take exposure |
2. Quant Mid Cap Fund-Growth Option Direct Plan – Midcap mutual fund
Fund analysis:
The fund’s objective is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio of Mid Cap companies. The risk grade is below average, and the returns grade is high.
The fund has a beta of 0.85 indicating that the movement of the fund is less relative to the market movement. The fund has a concentrated portfolio of 34 stocks, investing in both value & growth stocks. The fund has low risk (measured by standard deviation) than the category average.
| Pros | Cons |
| A consistent top performer in its category. The fund captured the market well when it was rising and falling, better than the category average. | Concentrated portfolio of 34 stocks. |
3. SBI Magnum Mid Cap Fund Direct-Growth – Midcap mutual fund
Fund analysis:
The fund’s objective is to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well-diversified basket of equity stocks of Midcap companies. The risk grade is above average and the returns grade is high.
The fund has invested across market capitalization and sectors of growth stocks. The fund holds a good risk-to-reward ratio. The fund has a high risk (measured in standard deviation) than the category average.
| Pros | Cons |
| Fund has outperformed the category average over the different horizons. Consistent performer. | The fund has a high expense ratio. |
4. Motilal Oswal Midcap 30 Direct-Growth – Midcap mutual fund
Fund analysis:
The fund’s objective is to achieve long-term capital appreciation by investing in a maximum of 30 quality mid-cap companies having long-term competitive advantages and potential for growth. The risk grade is high and the returns grade is above average.
The fund has a beta of 0.95 indicating that the movement of the fund is quite closely relative to the movement of the market. The fund has a concentrated portfolio of growth stocks consisting of 27 companies spread over different sectors. The fund has a high risk (measured in standard deviation) than the category average.
| Pros | Cons |
| The fund captured the market well when it was rising. The fund captured the market well when it was falling. | Concentrated portfolio. |
5. Edelweiss Mid Cap Fund Direct Plan-Growth Option – Midcap mutual fund
Fund analysis:
The fund has outperformed the category and the benchmark with good margins. The risk grade is average and the returns grade is above average.
The fund has delivered consistent returns over different horizons and has a well-diversified portfolio of 61 growth stocks, investing across market capitalization. The fund has a high risk (measured in standard deviation) than the category average.
| Pros | Cons |
| Fund captured the market well when it was rising. Consistent performer. | Returns are above average. |
6. Kotak Emerging Equity Scheme Direct-Growth – Midcap mutual fund
Fund analysis:
The fund’s objective is to generate long-term capital appreciation by investing predominantly in mid-companies. The scheme may also invest in debt and money market instruments, as per the asset allocation table. The risk grade is above average and the returns grade is above average.
The fund has a well-diversified portfolio across market capitalization and sectors except for the communication services sector. The fund has a high risk (measured in standard deviation) than the category average.
| Pros | Cons |
| Well-diversified portfolio.Good risk-to-reward ratio. | Minimum monthly SIP amount Rs 1000/- |
7. UTI Mid Cap Fund-Growth Option Direct – Midcap mutual fund
Fund analysis:
The fund is rated 4-star by Morningstar. The risk grade is average and the returns grade is above average.
The fund has a well-diversified portfolio across market capitalization and sectors. The top 10 holdings of the fund consist of 25.87% only and the fund holds a total of 72 stocks in the portfolio. The fund has low risk (measured in standard deviation) than the category average.
| Pros | Cons |
| The fund captured the market well when it was rising. Fund captured the market well when it was falling. | The fund has a high expense ratio. |
8. Mahindra Manulife Mid Cap Unnati Yojana Direct-Growth – Midcap mutual fund
Fund analysis:
The fund has delivered marginally good returns over the long-term period. The risk grade is low and the returns grade is above average.
The fund has a blended style of investing which means the fund is having both value & growth stocks in its portfolio. The fund has a well-diversified portfolio across market capitalization and sectors.
The top 10 holdings of the fund consist of 28.33% only. The fund has low risk (measured in standard deviation) than the category average.
| Pros | Cons |
| Well-diversified portfolio.Relatively low risk. | 6-Month returns are less than the category average. |
9. Baroda BNP Paribas Mid Cap Fund Direct Plan Growth Option – Midcap mutual fund
Fund analysis:
The fund will emphasize companies that appear to offer opportunities for long-term growth and will be inclined toward companies that are driven by a dynamic style of management and entrepreneurial flair.
The risk grade is below average and the returns grade is above average. The fund is rated 4-star by Morningstar. The fund has a blended style of investing which means the fund is having both value & growth stocks in its portfolio.
The fund has low risk (measured in standard deviation) than the category average.
| Pros | Cons |
| The fund captured the market well when it was falling. Broad exposure to the market. | 1-Yr returns are less than the category average. |
10. Axis Mid Cap Fund Direct Plan-Growth – Midcap mutual fund
Fund analysis:
The fund is giving consistent returns over the long term with an attractive risk-to-reward ratio. The fund is 5-star rated by Morningstar. The risk grade is low and the returns grade is above average.
The fund has a beta of 0.76 indicating that the movement of the portfolio has very less relation to the market movement. The fund has outperformed the category and the benchmark.
The fund has low risk (measured in standard deviation) than the category average.
| Pros | Cons |
| Attractive risk-to-reward ratio.Consistent performer. | Fund was not able to capture the market well when it was rising. |
Features of Midcap Mutual Funds
Before we delve further, let’s check out what features midcap mutual funds have and how would you identify the best ones.
1. Risk-return Ratio
Not too much. Not too less. Unlike small-cap mutual funds, with the best mid-cap mutual funds, you get a moderate risk-return ratio.
Despite the low risk, these MF schemes often outperform large-cap equity funds and generate greater returns in the long run.
2. Asset Allocation
When it comes to investing equity or equity-based securities of mid-cap companies, the SEBI mandates at least 65% of the total assets to be invested. The rest of the assets can be allocated to debt securities.
Major Advantages of Midcap Mutual Funds in India
1. Transparency
SEBI (Securities and Exchange Board of India) mandates all mid-cap mutual funds and displays their expense ratios, NAVs, and month-end portfolios.
This data is also regulated closely by the apex body.
Who are the Top Midcap Mutual Funds Suited For?
Midcap mutual funds come with a probable capacity for market-beating returns.
For this, investors who are willing to sit through long-term plans and face volatility would best fit. Some factors that must be considered before opting for these schemes are –
- One must understand their financial goals before making a commitment.
- Everyone has a certain capacity to bear the risk levels of mutual fund schemes. One must evaluate the risk levels carefully before investing.
- Investors can opt for schemes that have a low expense ratio (the portfolio management fee one has to pay to the AMCs) and a decent track record.
- If one redeems their funds before a specific period, the AMCs levy a penalty called Exit Load. Investors must check the Exit Load, which is denoted in percentage and mentioned in the scheme-related documents.
Tax on Midcap mutual funds
Here is the taxability of top midcap mutual funds.
1. TDS
A midcap funds’ dividend that exceeds INR 5,000/ fiscal year is applicable for 10% TDS.
2. Long-term Capital Gains Tax (LTCG Tax)
If a sold unit’s holding period is over 1 year and the gains exceed INR 1 L, the LTCG tax will be 10%. Any amount below INR 1 L/ FY is exempted from LTCG tax.
3. Short-term Capital Gains Tax (STCG Tax)
If one sells the fund units within one year of the purchase, they’ll have to pay a 15% STCG tax on the capital gains.
Conclusion:
For any investor who is looking for capital appreciation with comparatively lower risk than the small-cap mutual funds. Companies in this fund are fast-growing companies with the potential to become large-cap in the future.
FAQ
Can I liquidate my midcap mutual funds easily?
Yes, these funds are highly liquid and one can sell their units whenever they want.
What kind of taxes would I have to pay on midcap mutual funds?
You’ll have to pay 10% TDS if any dividend from the funds exceeds INR 5,000/ FY. 10% LTCG tax if your gains exceed INR 1 L and the holding period of the sold units is over 1 Year.
15% STCG tax on your capital gains if you sell your fund units within 1 year of purchase.
Which is the best midcap mutual fund in India right now?
As of now, PGIM India Mid-cap Opportunities Fund Direct Plan-Growth is the top midcap mutual fund in India.
What is mid-cap mutual funds?
Ans. A form of equity mutual fund known as a “mid-cap fund” invests in the stock of mid-sized businesses. According to the rules, mid-cap companies are defined as those ranked 101 through 250 on the basis of market capitalization.
Are Midcap funds safe?
Ans. Mid-cap funds can be quite volatile in the short term; therefore, experts advise investors to avoid them if their investment horizon is short. They should make up less than 20% of their overall investment portfolio, they advise. A 20% allocation to mid-cap funds may be considered, depending on risk tolerance.
Which type of SIP gives the highest return?
Ans. Multi-cap schemes provide better ROIs than both types of SIPs, but they are more volatile than large-cap or mid-cap schemes. For investors who desire high returns but don’t mind taking some risk with their investments, these SIPs are the perfect option.
Disclaimer:
This is not recommendation advice, use it for educational purposes only. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including fluctuations in the interest rates.
The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes.
