Best Mid Cap Mutual Funds to Invest In (2024)

Last Updated on Aug 12, 2024 by Anjali Chourasiya

If you’re looking to strike a balance between risk and reward, mid cap mutual funds might be the sweet spot for your portfolio. These funds focus on mid-sized companies that are often in a dynamic growth phase, offering the potential for higher returns compared to large cap funds, yet with less volatility than small caps. The appeal of mid cap funds lies in their ability to capture the growth of emerging companies that could be the market leaders of tomorrow. But with so many options available, how do you identify the best mid cap mutual funds for your investment strategy? In this article, let’s explore the best mid cap mutual funds, their features, advantages, risks, how to choose the top mid cap mutual funds, and more.

Best Mid-Cap Mutual Fund in 2024

Name	AUM (Rs. in cr.)	CAGR 3Y (%)	Expense Ratio (%)	Minimum Lumpsum (Rs.)	Minimum SIP (Rs.)	Exit Load (%)
Motilal Oswal Midcap Fund	14,445.55	39.10	0.61	500.00	1,500.00	1.00
Quant Mid Cap Fund	9,282.92	33.05	0.58	5,000.00	0.00	0.50
HDFC Mid-Cap Opportunities Fund	75,382.30	30.08	0.74	100.00	100.00	1.00
Mahindra Manulife Mid Cap Fund	3,165.98	29.05	0.43	1,000.00	0.00	1.00
Nippon India Growth Fund	30,838.94	28.84	0.79	100.00	0.00	1.00
Edelweiss Mid Cap Fund	6,994.17	27.60	0.30	100.00	100.00	1.00
Sundaram Mid Cap Fund	12,465.38	27.16	0.89	100.00	1,000.00	1.00
ITI Mid Cap Fund	985.87	26.74	0.43	5,000.00	0.00	1.00
Invesco India Midcap Fund	5,216.03	25.58	0.61	1,000.00	0.00	1.00
Kotak Emerging Equity Fund	49,023.27	25.37	0.34	100.00	100.00	1.00

Note: The data is from 12th August 2024. It is filtered using Tickertape Mutual Fund Screener with the following parameters-

• Category > Equity > Mid-cap fund
• AUM (Assets Under Management)
• 3-yr CAGR: Set to high –  Sort from highest to lowest
• Expense Ratio
• Minimum Lumpsum
• Minimum SIP
• Exit Load

🚀 Pro Tip: Use Tickertape’s Mutual Fund Screener to filter and compare funds based on performance, expense ratio, and risk. Find funds that match your goals and risk tolerance for smarter investment choices.

About the 10 Best Mid Cap Mutual Funds in India

Motilal Oswal Midcap Fund

The Motilal Oswal Midcap Fund, managed by Motilal Oswal Asset Management Company, focuses on investing in mid-sized companies with high growth potential. The fund has an AUM of Rs. 14,445.55 cr., and has delivered an impressive 3-yr CAGR of 39.10%. The fund charges an expense ratio of 0.61%. Investors can enter the fund with a minimum lump sum of Rs. 500 or start a SIP with Rs. 1,500. An exit load of 1.00% applies if units are redeemed within a year.

Quant Mid Cap Fund

Quant Mid Cap Fund, managed by Quant Mutual Fund, is known for its dynamic investment strategy, which adapts to changing market conditions. With an AUM of Rs. 9,282.92 cr., the fund has achieved a 3-yr CAGR of 33.05%. The fund has a relatively low expense ratio of 0.58%. The minimum investment for a lump sum is Rs. 5,000, with no mandatory SIP requirement. The exit load is 0.50% if units are sold within a year, encouraging longer-term holding.

HDFC Mid-Cap Opportunities Fund

HDFC Mid-Cap Opportunities Fund, one of the flagship offerings from HDFC Asset Management Company, is among the largest in its category with an AUM of Rs. 75,382.30 cr. The fund has a strong track record, with a 3-yr CAGR of 30.08%. The expense ratio stands at 0.74%. Investors can start with a minimum lumpsum investment of Rs. 100 or opt for a SIP of the same amount, making it accessible to a broad range of investors. The exit load is 1.00% if units are redeemed within a year.

Mahindra Manulife Mid Cap Fund

The Mahindra Manulife Mid Cap Fund, managed by Mahindra Manulife Mutual Fund, targets mid-cap companies that have strong growth prospects. The fund has an AUM of Rs. 3,165.98 cr.,  and has recorded a 3-yr CAGR of 29.05%. It boasts a low expense ratio of 0.43%. The fund requires a minimum lumpsum investment of Rs. 1,000, with no SIP requirement. An exit load of 1.00% applies if redeemed within a year, which is standard across the category.

Nippon India Growth Fund

Nippon India Growth Fund, from Nippon Life India Asset Management, is one of the oldest mid-cap funds in the Indian market, with a large AUM of Rs. 30,838.94 cr. The fund has achieved a 3-yr CAGR of 28.84%. The expense ratio is 0.79%, slightly higher than some peers. Investors can start with a minimum lump sum of Rs. 100, and there is no SIP requirement. An exit load of 1.00% applies if units are redeemed within a year.

Edelweiss Mid Cap Fund

Managed by Edelweiss Asset Management, the Edelweiss Mid Cap Fund has an AUM of Rs. 6,994.17 cr. It focuses on mid-cap companies with a long-term growth horizon, and has achieved a 3-yr CAGR of 27.60%. The fund’s expense ratio is among the lowest in its category at 0.30%. The fund is accessible with a minimum lump sum of Rs. 100, and a SIP can also be started with Rs. 100. An exit load of 1.00% applies if units are redeemed within a year.

Sundaram Mid Cap Fund

Sundaram Mid Cap Fund, managed by Sundaram Mutual Fund, has a long-standing presence in the mid-cap category with an AUM of Rs. 12,465.38 cr. The fund has delivered a 3-yr CAGR of 27.16%. The expense ratio is 0.89%. Investors can start with a minimum lump sum of Rs. 100 or a SIP of Rs. 1,000. The fund has an exit load of 1.00% if redeemed within a year.

ITI Mid Cap Fund

ITI Mid Cap Fund, managed by ITI Mutual Fund, is relatively new but has shown promising performance with a 3-yr CAGR of 26.74%. The fund has an AUM of Rs. 985.87 cr.  and maintains a low expense ratio of 0.43%. The minimum lumpsum investment is Rs. 5,000, and there is no SIP requirement. The fund imposes an exit load of 1.00% if units are sold within a year.

Invesco India Midcap Fund

The Invesco India Midcap Fund, managed by Invesco Mutual Fund, focuses on mid-cap companies with strong fundamentals and growth potential. The fund has an AUM of Rs. 5,216.03 cr., and has recorded a 3-yr CAGR of 25.58%. The expense ratio of the fund is 0.61%. Investors can enter with a minimum lump sum of Rs. 1,000, and there is no SIP requirement. An exit load of 1.00% applies if units are redeemed within a year.

Kotak Emerging Equity Fund

Kotak Emerging Equity Fund, managed by Kotak Mahindra Asset Management Company, is one of the largest mid-cap funds with an AUM of Rs. 49,023.27 cr. The fund has a 3-yr CAGR of 25.37%. It has a low expense ratio of 0.34%. The fund is accessible with a minimum lump sum investment of Rs. 100 and a SIP of the same amount. An exit load of 1.00% applies if units are redeemed within a year.

What is a mid-cap mutual fund?

Mid Cap mutual funds are equity mutual funds that primarily invest in mid-sized companies in India, with market capitalisation between Rs. 5,000 cr and Rs. 20,000 cr. These companies are ranked 101 to 250 based on their market capitalisation by the Securities and Exchange Board of India (SEBI). 

Mid-cap mutual funds typically allocate at least 65% of their total assets to equity and equity-related securities of mid-cap companies, with the rest in debt securities or other classes. Mid-cap mutual funds offer the stability of large-cap companies with the growth potential of small-cap companies. With a diverse range of mid-cap stocks from various sectors, these professionally managed funds offer investors an opportunity to tap into the exciting world of mid-cap companies that are on the rise. 

Features of Best Mid Cap Mutual Funds

1. Growth Potential: Mid cap mutual funds often invest in companies that are in their growth phase, offering the possibility of higher returns as these companies expand.
2. Diversification: These funds generally invest in a broad range of mid-sized companies across various sectors. This diversification could help reduce risk by not relying heavily on any single stock or sector.
3. Active Fund Management: Many mid cap mutual funds are actively managed, where fund managers continuously monitor and adjust the portfolio to capitalise on market opportunities.
4. Balanced Risk and Return: Mid cap mutual funds may offer a middle ground between the stability of large cap funds and the higher growth potential of small cap funds. 
5. Liquidity: Mid cap companies tend to be more liquid than small cap companies, which could mean that mid cap mutual funds might offer relatively better liquidity. However, it is important to note that liquidity may still be an issue during market downturns.

How to Choose the Best Mid Cap Mutual Funds?

Selecting the right mid cap mutual fund can seem daunting, but with the right approach, you can make informed choices that align with your financial goals. Here’s a step-by-step guide on how you might choose the best mid cap mutual funds:

1. Assess Historical Performance

When evaluating mid cap mutual funds, one of the first steps could be to review their historical performance. While past performance does not guarantee future results, it can offer insights into how the fund has managed different market conditions. 

2. Evaluate the Fund Manager’s Expertise

The fund manager plays a pivotal role in the performance of mid cap mutual funds. It’s crucial to assess the fund manager’s track record, particularly their experience with managing mid cap portfolios. A manager with a proven history of successful stock selection and portfolio management might indicate a higher probability of achieving favourable outcomes. 

3. Analyse Portfolio Composition

Understanding what’s inside the fund is key to making an informed decision. Mid cap mutual funds typically invest in a mix of mid-sized companies across various sectors. By analysing the portfolio composition, you can get a sense of the sectors and companies the fund is betting on. A well-diversified portfolio might reduce risk, while concentrated bets in specific sectors could lead to higher volatility. 

4. Consider the Expense Ratio

The expense ratio is an important factor that can impact your returns. This ratio represents the annual fee that the fund charges to manage your investment. Generally, a lower expense ratio might be more favourable, as it leaves more room for your investment to grow. 

5. Look at Risk-Adjusted Returns

Simply looking at returns might not give you the full picture. It’s important to consider how much risk the fund is taking to achieve those returns. Metrics like the Sharpe Ratio can help you evaluate the fund’s performance on a risk-adjusted basis. A higher Sharpe Ratio indicates that the fund is delivering better returns for the level of risk it’s taking, which might be a key consideration if you’re looking to balance risk and reward.

6. Check Liquidity and Exit Loads

Liquidity is another crucial factor, especially if you might need to access your money quickly. Funds with higher liquidity ensure that you can redeem your investment without significant price impact. Additionally, you should be aware of any exit loads, which are fees charged if you sell the fund before a specified period. Funds with low or no exit loads might be preferable if flexibility is important to you. 

The best part is that you can find all this information right on the asset pages on Tickertape and the mutual fund screener. Check it out now!

How to Invest in Mid Cap Mutual Funds?

Once you’ve selected the best mid cap mutual funds, the next step is to invest. Here’s a step-by-step process in brief.

1. Define Your Investment Goals

Before you begin, it’s important to clearly define your investment objectives. Are you investing for long-term growth, or do you need a fund that provides periodic income? Understanding your goals can help you choose between different options like growth plans or dividend plans within mid cap mutual funds. 

2. Choose Between Lump Sum and SIP

Deciding how to invest is just as important as deciding what to invest in. You can choose to invest a lump sum amount or opt for a Systematic Investment Plan (SIP). A SIP allows you to invest a fixed amount at regular intervals, which can help in averaging the purchase cost over time, reducing the impact of market volatility. 

3. Monitor Your Investments Regularly

After you’ve invested, it’s crucial to keep an eye on your investments to ensure they are on track to meet your goals. Regular monitoring can help you make timely decisions, such as rebalancing your portfolio or switching funds if necessary. For this purpose, turn on ‘Tickertape Alerts’ and never miss an update of your favourite fund.

4. Rebalance Your Portfolio Periodically

As your investment grows, the original allocation might shift, potentially increasing your risk exposure. Periodic rebalancing of your portfolio can help maintain your desired asset allocation. For example, if your mid cap mutual funds have appreciated significantly, you might consider rebalancing by moving some of your gains into other asset classes. You can connect your portfolio to Tickertape to analyse if any of your investments have become a red flag or has changed their composition. Analyse your portfolio thoroughly to rebalance it. Try it now!

5. Consult with a Financial Advisor

If you’re unsure about how mid cap mutual funds fit into your overall financial plan, consulting with a financial advisor might be beneficial. An advisor can provide personalised advice based on your risk tolerance, investment goals, and financial situation. 

Advantages of Investing in Mid Cap Mutual Funds

1. High Growth Return 

Mid-cap companies have the potential to become future large-cap companies, offering significant growth potential. In addition, they can deliver substantial returns and outperform large-cap mutual funds as they did in the past. 

2. Portfolio Diversification 

Investing in mid-cap mutual funds allows you to explore investing in mid-cap companies with market capitalisations between Rs. 5,000 cr. and Rs. 20,000 cr. These companies are ranked from 101 to 250 based on their market capitalisation by the Securities and Exchange Board of India (SEBI). 

3. Minimise Risk

Investing in stocks of different mid-cap companies can cushion your investment portfolio against economic downturns and reduce risk compared to direct investment in individual stocks.

4. Low Investment Amount

You can invest in the best mid-cap mutual funds for as low as Rs. 100. This allows investors who are still sceptical about investing in mutual funds to test the waters. 

5. Transparency

Mid-cap mutual funds are closely regulated by the Securities and Exchange Board of India (SEBI), which mandates them to disclose their Net Asset Values (NAVs), expense ratios, and month-end portfolios on their websites, ensuring transparency for investors.

6. Managed by Experienced Fund Managers

If you’re unsure about the best mid-cap stocks for your portfolio, the mid-cap mutual fund managers know exactly how you can generate exponential returns. By investing in mid-cap mutual funds, which are heavily invested in equity across numerous sectors of mid-sized companies, you can invest in some of the best mid-cap stocks.

Risks of Mid Cap Mutual Funds

1. Market Volatility

Mid cap stocks are generally more volatile than large cap stocks. This higher volatility means that mid cap mutual funds might experience significant fluctuations in value, which could affect your investment, especially in unstable market conditions.

2. Economic Sensitivity

Mid cap companies may be more susceptible to economic downturns compared to their large cap counterparts. This sensitivity might lead to underperformance in mid cap mutual funds during challenging economic times, which is an important consideration if you are thinking of investing in these funds.

3. Liquidity Risks

While mid cap companies generally have better liquidity compared to small caps, liquidity can still become a concern during periods of market stress. This might impact the fund manager’s ability to buy or sell stocks at favourable prices, potentially affecting the fund’s overall performance.

4. Management Risk

The performance of mid cap mutual funds, especially those that are actively managed, largely depends on the decisions made by the fund manager. Poor decision-making could lead to suboptimal returns, which is a risk that comes with actively managed funds.

5. Sector Concentration

Some mid cap mutual funds might have a higher exposure to specific sectors. If these sectors underperform, the fund’s returns could be negatively impacted, which could increase the risk associated with your investment.

Factors to Consider Before Investing in Mid Cap Mutual Funds

When you are considering investing in mid cap mutual funds, it’s important to evaluate several key factors. Here are some of the factors that you can consider before investing.

1. Investment Horizon: Mid cap mutual funds typically require a medium to long-term investment horizon. These funds invest in mid-sized companies that may need time to realise their growth potential. 

2. Risk Appetite: Mid cap mutual funds are generally more volatile than large cap funds. This increased volatility means that mid cap mutual funds can experience significant fluctuations in value. If you have a higher risk tolerance and are comfortable with potential short-term declines in your investment, mid cap mutual funds may be suitable for you.

3. Consistency of Fund Performance: You might want to evaluate the consistency of a fund’s performance across various market cycles. Funds that have demonstrated stable returns over time may offer a better indication of how they might perform in the future. 

4. Fund Manager’s Experience: The experience and track record of the fund manager can significantly influence the performance of mid cap mutual funds. Managers with a proven history of selecting quality mid cap stocks might enhance the fund’s potential for delivering good returns. 

5. Expense Ratio and Costs: The expense ratio, which is the cost of managing the fund, can impact your returns. Lower expense ratios are generally preferable, as they leave more room for your investment to grow. Additionally, you should consider any exit loads or other transaction fees that could affect your overall returns.

6. Sector and Stock Concentration: Some mid cap mutual funds might have higher exposure to specific sectors or stocks, which could increase risk if those sectors underperform. It’s important to check the fund’s portfolio to ensure it is diversified across various sectors. 

Who Can Invest in Mid Cap Mutual Funds?

Mid cap mutual funds may not be suitable for every investor. Here’s a look at who might consider investing in these funds:

1. Investors with Moderate to High Risk Tolerance

Mid cap mutual funds might be appropriate for investors who are comfortable with moderate to high levels of risk. These funds can be more volatile than large cap funds due to the nature of mid-sized companies.

2. Individuals with a Medium to Long-Term Investment Horizon

If you are able to invest for a medium to long-term period, typically 5 to 7 yrs or more, mid cap mutual funds might be suitable. This time frame allows mid cap companies to potentially grow and improve their market position, which could translate into higher returns over the long run.

3. Investors Seeking Portfolio Diversification

Mid cap mutual funds could be valuable if you are looking to diversify your investment portfolio beyond large cap and small cap funds. They offer a balance between the stability of large caps and the growth potential of small caps, which might help in creating a well-rounded portfolio.

4. Experienced Investors or Those with Financial Guidance

Mid cap mutual funds may be more suitable for experienced investors who understand market dynamics and can navigate the volatility associated with mid-sized companies. If you are a less experienced investor, consulting with a financial advisor might help you determine if mid cap mutual funds align with your financial objectives. 

5. Investors Interested in Active Fund Management

Mid cap mutual funds are often actively managed, meaning that fund managers frequently adjust the portfolio to capitalise on market opportunities. If you prefer a more hands-on approach where the fund manager plays a significant role in stock selection and portfolio management, mid cap mutual funds might appeal to you. 

Tax implications on mid-cap mutual funds

Since mid-cap mutual funds are classified as asset classes, understanding the taxation on mid-cap funds is crucial to assess your post-tax returns accurately. In addition, it helps you determine your investment gains when redeeming your investment.

The capital gains on mid-cap mutual funds are taxed based on the duration of your investment:

Short-Term Capital Gains (STCG)

If you hold equity mutual funds for less than a year, the gains from these investments are classified as short-term capital gains. According to the new budget, these gains are now taxed at a rate of 20%, which has been increased from the previous rate of 15%.

Long-Term Capital Gains (LTCG)

For equity mutual funds held for more than a year, the gains are considered long-term capital gains. The key points to note under the new budget are:

• Tax-Free Limit: Gains up to Rs. 1.25 lakh in a financial year remain tax-free. This limit has been increased from the previous threshold of Rs. 1 lakh.
• Tax Rate: Any gains above Rs. 1.25 lakh are taxed at a flat rate of 12.5%. It was previously taxed at 10%.
• Indexation: It’s important to note that the benefit of indexation, which previously allowed investors to adjust the purchase price of their assets for inflation, has been removed for all asset classes, including equity mutual funds.

Indexation is a method used to adjust the purchase price of an asset (like property or gold) for inflation over the years. This adjusted price is then used to calculate capital gains. Previously, long-term capital gains from selling property, gold, or other unlisted assets were taxed at 20%, but you could use indexation to reduce your taxable profit. The new rule simplifies the tax structure by setting a flat 12.5% tax rate for all long-term capital gains. However, it removes the indexation benefit.

Summary

Capital Gains Tax	Holding Period	Old Rate	New Rate
Short-Term Capital Gains (STCG)	Less than 12 months	15%	20%
Long-Term Capital Gains (LTCG)	More than 12 months	10%	12.50%

• No Indexation Benefit: This change affects the overall tax liability, potentially increasing it for long-term investors.

Being aware of these tax implications on mid-cap funds allows you to accurately assess your potential returns after accounting for taxes.

Key things to consider before investing in mid-cap funds 

• Long-term investment horizon: Since mid-cap mutual funds invest in companies that are yet to become large-cap, patience is required for potential growth. These companies may take time to recover during economic slowdowns, so a long-term investment horizon of 3 to 5 years is recommended to benefit from the investment fully.
• High risks: Mid-cap funds carry higher risks than large-cap funds but also offer the potential for market-beating returns. Only investors with an appetite for higher risks should consider investing in this category.
• Short to medium-term volatility: Mid-cap funds can be volatile in the short to medium term, with sudden drops in portfolio value. Only those willing to tolerate this volatility and fathom the risks involved should invest in mid-cap funds.

Conclusion

Understanding mid-cap mutual funds’ risks and potential rewards is crucial before making investment decisions. These funds may be suitable for investors with a long-term investment horizon, willingness to take higher risks, and comfort with short to medium-term volatility. On Tickertape Mutual Fund Screener, you can explore numerous mid-cap mutual funds that fit with your investment thesis. 

FAQs About Mid Cap Funds