Mid-Cap Mutual funds are part of mutual funds where Investors pool in their investment to invest in the companies ranked between 101 to 250, which are Mid-Cap Companies these companies are among the fastest-growing companies. According to the Securities and Exchange Board of India (SEBI), mid-cap companies are those which are ranked between 101 and 250 in the list of companies according to market capitalization. The market capitalization of these companies will be between Rs. 5,000 Crore to Rs. 20,000 Crore.
Mid-Cap Mutual funds offer better returns compared to Large-Cap Mutual funds with more volatility in the market, this has stable growth compare to Small-Cap mutual funds. Mid-Cap Mutual funds provide a perfect combination of risk and rewards
Features of Mid-Cap Mutual Funds.
Risk and Returns:
Mid-Cap mutual funds are investing money in Mid-Cap companies since these companies are growing in the market, they face volatility as per the market condition. So, it is necessary to check the Mutual fund’s scheme record how it had performed in bullish and bearish market conditions to minimize the risk.
Mid-Cap mutual funds provide higher returns compare to Large-cap mutual funds and Mid-Cap companies are in the growing condition so that these companies can be Large-Cap companies in the future so there is a higher possibility to get good returns in long run.
Growth and Expansion:
Mid-cap companies have a higher potential for growth, this allows them to increase their marketshare. Most of the mid-cap companies experience shocking growth volumes and profit margins. This is the phase when mid-cap companies move up to becoming large-cap companies.
Expense ratio:
Mid-cap mutual funds charge you the fees for managing the Investment by the company that in general it is called the Expense ratio. SEBI has mandated the maximum limit of expense ratio is to be 2.50%. The Expense ratio to be considered in priority during the selection of scheme any scheme with a lower expense ratio will help to gain maximum profit.
Tax Implications:
Mid-Cap mutual funds are subject to capital gains and dividend distribution tax both are explained below in brief below slab may change as per policy by the gov’t in the future.
- Capital Gains Tax
Withdrawing the units of a Mid-Cap Mutual Funds will add to taxable capital gains in the Income of an Individual. The rate at which you will be taxed depends on the period for which you stayed invested in the scheme – the holding period. The tax rates are as follows:
Long Term Capital Gain (LTCG) – A holding period of more than one year. There is no tax on LTCG of up to Rs. 1 lakh. Above this amount, LTCG is taxed at the rate of 10% without the benefit of indexation.
Short Term Capital Gain (STCG) – A holding period of up to one year. STCG is taxed at 15%.
- Dividend Distribution Tax (DDT)
As mandated by SEBI, all fund houses deduct a DDT of 10% before paying out dividends to unitholders.
Advantages of Mid-Cap Mutual Funds:
- Mid-cap mutual funds provide good returns compared to large-cap mutual funds.
- Mid-cap mutual funds invest money in Mid-cap companies that are growing in the market, these investments perform well according to market conditions and move with the fluctuation in the market.
- Mid-cap mutual funds are investing in the companies which are having good liquidity over the investment compared to small-cap mutual funds.
- Mid-cap mutual funds are managed by professional fund managers and research analysts which invest the total investment in many sectors this process minimizes the risk and increases the returns on investment.
Disadvantages of Mid-Cap Mutual Funds:
- Mid-cap mutual funds do not provide stable returns in the market as Mid-cap companies make move as per the market conditions.
- Mid-cap mutual funds are risky compared to large-cap mutual funds.
- Mid-cap mutual funds are not suitable for short term investors.
- The probability of return is high with more risk involved.
- Mid-cap mutual funds hit badly during the bear market and also will not able to sustain in crisis.
Top 5 Mid Cap- Mutual funds:
- DSP Mid cap mutual Fund:
Fund size (Cr) : Rs. 7,883
1 Yr Return : 22.7% PA
3 Yrs Returns : 6.1% PA
5 Yrs Returns : 13.33% PA
7 Yrs Returns : 16.5% PA
NVA as on 18-Sep-2020 : Rs. 66.76
Expense Ratio : 1.01
- Invesco India Mid Cap Fund:
Fund size (Cr) : Rs. 953
1 Yr Return : 22.52% PA
3 Yrs Returns : 7.9% PA
5 Yrs Returns : 12.1% PA
7 Yrs Returns : 17.5% PA
NVA as on 18-Sep-2020 : Rs. 61.47
Expense Ratio : 0.96
- Axis Mid-Cap Mutual Fund:
Fund size (Cr) : Rs. 6,307
1 Yr Return : 22.0% PA
3 Yrs Returns : 11.5% PA
5 Yrs Returns : 12.3% PA
7 Yrs Returns : 17.2% PA
NVA as on 18-Sep-2020 : Rs. 46.93
Expense Ratio : 0.58
- Taurus Discovery Mid-Cap Mutual Fund:
Fund size (Cr) : Rs. 52
1 Yr Return : 15.1% PA
3 Yrs Returns : 3.6% PA
5 Yrs Returns : 10.2% PA
7 Yrs Returns : 14.5% PA
NVA as on 18-Sep-2020 : Rs. 49.11
Expense Ratio : 2.18
- L&T Mid-Cap Mutual Fund:
Fund size (Cr) : Rs. 5,791
1 Yr Return : 17.6% PA
3 Yrs Returns : 1.2% PA
5 Yrs Returns : 11.2% PA
7 Yrs Returns : 17.6% PA
NVA as on 18-Sep-2020 : Rs. 150.19
Expense Ratio : 0.74
Disclaimer: All the above information is for educational purposes only, and the mutual fund’s companies shown are not be considered has recommendations has the above data might vary from actuals in the period of time. kindly read the scheme and policy-related documents carefully before investing in any mutual funds and visit the official website for more information.
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