Mid-cap Mutual funds! Worth the hype??🤔
I have recently read an article about Mutual funds loading up on quality mutual funds in their portfolios. So, I wanted to delve deep into mid-cap mutual funds to understand if they are actually worth the hype.
The article said that “The Nifty and Nifty Midcap 100 have gained around 6% in the last one year, The stocks in which mutual funds have raised their holdings have consistently given an average return of 8% in the past one year and 115% in the previous two years.” This got me wondering about mid-cap mutual funds.
So what exactly are mid-cap mutual fundsâť“
Mid-cap funds are equity-oriented mutual funds that invest in companies with mid-market capitalisation. According to SEBI, Mid-cap companies are those which are ranked between 101 and 250 in the list of companies based on market capitalization.
âś…Features of Mid-cap mutual funds:âś…
• Competitive performance: they have immense growth potential and provide competitive returns.
• Liquidity: These are mostly open-ended mutual funds with a no lock-in period so they can be liquidated anytime.
• Long-term Perspective: Mid-cap funds are most suited for long-term investment as the true growth potential of the companies that these funds invest in is actually realized in the long run.
Mid-cap companies fall between small cap and large cap and they offer certain advantages and disadvantages to both of them. Mid-cap usually offers b better returns than the large-cap but are more volatile than them. On the contrary, they are more stable than the small-cap companies but they tend to offer lesser returns. So, to sum it up, they are the perfect combination of risk and return.
🛑Some critical factors to look out for before investing in any kind of Mutual funds:🛑
• Expense ratio of the scheme investing in (Lower the expense ratio, better the returns)
• Check out who/which fund manager/fund house is managing your money.
• Risk level associated with the fund that you are investing in.
• Tax Implications- DDT (Dividend distribution tax), Capital gains tax.
What do you think about Mid-cap mutual funds? Worth investing?
Link to the Article: https://economictimes.indiatimes.com/markets/stocks/news/...
