Mid Cap Mutual Funds: Why Invest for Growth Now?

Written by Radhika Dave  »  Updated on: January 28th, 2025

Introduction

Do you know the secret behind every investor who is generating higher returns while minimising the risk? They simply invest in Mid Cap Mutual Funds.

It is a simple investment plan between large-cap and small-cap funds. These types of funds invest in mid-cap companies to generate capital appreciation. If you do not want to invest your money where it holds the higher risk and generates lower returns. Then mid-cap funds will change your investment game.

This article will help you to learn mid-cap funds from top to bottom. What is the investment strategy and how you can choose the best mid cap mutual funds that fulfils your future goals? Let's dive into it.

What are Midcap Mutual Funds?

The mid cap funds are type of mutual funds that focus on investing in mid-cap companies. This company's market size is between 5000 to 20,000 crores, which is a huge number. The goal behind investing in mid-cap companies is to reduce the risk and generate higher returns.

These funds also provide an opportunity for investors to generate higher returns. It invests in mid-cap companies that are in its growth phase and it can provide higher growth in future. These funds target those investors who are looking for balanced growth.

Investment Strategy of Midcap Mutual Funds

The mid cap mutual funds uses a simple strategy of investing to generate profit. It mainly invests in mid-sized companies stocks that comes between large & small cap companies. It target investors who are in search for a balanced growth.

The expert team of fund managers selects the profitable stocks. They use deep research and advanced analytics to pick the right stocks. They also actively manage the portfolio and adjust it according to market conditions. This helps to reduce the risk and improve the fund performance.

The mid-cap funds spreads the investment in different sectors. This helps to reduce the risk because your investment is not a part of one sector. Even when a sector does not perform well, it will not affect the overall performance.

This investment strategy helped mid-cap funds to perform well in the last few years and became a favourable choice in the mutual funds market.

Benefits of Investing in Midcap Funds

The mid-cap funds are a popular option for investors who want balanced growth. It also provides several benefits as an investor you do not want to miss:

• Long-Term Growth

The mid-cap funds focus on investing in medium-sized companies. These companies have the potential to grow in the future, so it helps you as well to generate long-term growth.

• Stress-Free Fund Management

The mid-cap funds have a team of expert fund managers who manage portfolios actively. If you do not have enough time, then the fund managers will do it for you.

• Suitability

The mid-cap funds fall between large and small-cap funds. It makes it a suitable option for investors who do not want to invest in large-cap funds with low returns and small-cap funds with higher risk.

• Opportunity for Wealth Creation

The mid-cap funds invest in companies that are in the growth phase which means it consistently expands over time. It helps investors to generate higher returns compared to large-cap funds.

• Low Investment Plan

If you are looking to start with a low investment then mid-cap funds helps you to invest through SIP (Systematic Investment Plan). You can start with a low amount and grow according to your situation.

Top 10 Midcap Mutual Funds to Invest in 2025

If you look at the past performance, mid-cap funds performed well and showed positive results to investors. Here are some top midcap mutual funds that provided significant growth:

1. Motilal Oswal Midcap Fund

2. HDFC Midcap Opportunities Fund

3. Edelwiess Midcap Fund

4. Quant Midcap Fund

5. Nippon India Growth Fund

6. Mahindra Manulife Midcap Fund

7. Baroda Midcap Direct Fund

8. Invesco India Midcap Fund

9. Kotak Emerging Equity Fund

10. ITI Midcap Fund

If you are planning to invest, then these top midcap mutual funds will take your investment to the next level.

How to Choose the Right Midcap Fund?

There is a vast option of mid-cap mutual funds that helps you to generate higher returns, but what fulfil your goals makes all the difference. Here are some tips for choosing the best midcap mutual funds that takes your investment to the next level:

1. Understand your Investment Goals

It's important to identify your investment goals such as risk tolerance and time horizon. It helps you to choose the right mid-cap fund that will help you achieve your financial goals.

2. Check Past Performance

Before choosing the fund, make sure to consider past 3 or 5 years performance of the fund. It will give you an idea of how the fund is performing and it can generate you great returns or not in long term.

3. Asset Under Management

The best way to choose the best mid cap mutual funds is by checking the AUM of the fund. It will give a clear picture of fund size and credibility in the market.

4. Fund Manager Expertise

The fund manager plays an important role in growing the fund. Check the fund manager's expertise and experience in the market will help you to choose the right mid-cap fund.

5. Low Investment Option

If you are not capable of investing a large amount, then checking out if the fund provides a way to invest through SIP is beneficial for you. It allows you to start with a low initial amount and grow your investment over time.

By considering these tips, you can choose the best midcap mutual funds that will help you to achieve your financial goals.

Who Should Invest in Midcap Funds?

The mid-cap funds are a great option for anyone but it is a better option if you are:

Moderate to High-Risk Takers

The mid-cap funds are focused on providing higher growth than large-cap funds. This is why it has to face higher volatility that can affect these fund's performance in the short term. If you are planning to invest for at least 5-7 years and manage short-term losses, then mid-cap funds are a great choice for you.

High Return Seekers

The mid-cap funds invest in mid-sized companies that are in the growth phase to become large-cap companies. If you are a high return seeker then these funds give you an opportunity to grow your investment.

Diversification Seeker

The mid-cap funds spread the investment in different sectors to reduce the risk. If you do not want your investment to throw in one basket, then investing in mid-cap funds will be an ideal choice for you.

Final Thoughts

To conclude, the mid cap mutual funds are a value investment choice that is neither risky as small-cap funds nor provides low returns as large-cap funds. It gives you an opportunity to invest in companies that are consistently growing. So if balanced growth is everything for you, then mid-cap funds are the option you are looking in mutual funds.

You can also invest through a SIP where you have to invest a fixed amount regularly. It will allow you to start with a low initial amount and grow your investment over time.



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