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  • Best Mid Cap Mutual Funds

Best Mid Cap Mutual Funds to Invest

Mid cap mutual funds invest in equities of mid-sized companies based on market capitalization and suited for long term investments. They have higher growth potential than large-cap companies and are less risky than small-cap companies.

Learn how Scripbox Recommends funds

Best Mid Cap Mutual Funds to Invest in September 2022

Fund NameScripbox Opinion
Till Date CAGR
Edelweiss Mid Cap Fund (G)
Edelweiss Mid Cap Fund (G)

25.6%

12%

35.8%

12.7%

25.2%

14%

37.1%

18.6%

24.8%

22.1%

28.9%

16.8%

20.9%

12%

20.7%

17%

24%

11.5%

25%

17.9%

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Mid-cap mutual funds invest in mid-cap companies which rank between 101 to 200 on market capitalization. These funds are well-suited for investors seekings a long-term investment and not being affected by short-term fluctuations. While selecting the best mid-cap mutual funds always ensure that the fund meets your expectations and needs. Other than this primary factor you must also consider the historical performance of the fund, AUM, a trend in NAV, return, risk, tax, future prospects of the mid-cap companies, and exit load. These factors will help you in making a better decision in a long-term investment.

Top 10 Popular Mid Cap Mutual Funds in 2022

Fund Name3 Year ReturnsExpense Ratio
HDFC Mid Cap Opportunities Fund Growth22.2%1.73%
UTI Mid Cap Fund Growth25.3%2.12%
PGIM India Midcap Opportunities Fund Growth36.5%2.13%
Nippon India Growth Fund Growth23.6%1.89%
Axis Midcap Fund Growth23.4%1.80%
Sundaram Mid Cap Fund Growth16.8%2.48%
DSP Midcap Fund Growth16.9%1.79%
Tata Mid Cap Growth Fund21.5%2.29%
Invesco Mid Cap Fund Growth22.9%2.14%

What are Best Mid Cap Mutual Funds?

All mid cap mutual funds invest at least 65% of their total assets in companies that rank between 101 and 250 based on market capitalization (midcap stocks). The best mid cap mutual funds strike a perfect balance between risk and return. They have higher growth potential than large cap companies and are less risky than small cap companies. Mid cap funds invest in midcap stocks that have the potential to grow into large cap companies. However, the tables may turn too.

Midcap companies cater to emerging markets of the economy and hence have a platform to grow. These companies are often underfollowed, under-researched, and therefore undervalued. Thus investment in midcap funds allows investors to earn potentially higher returns in the long run. Midcap companies can be highly sensitive to market fluctuations. Hence for optimal returns, investors are suggested to invest in the best midcap funds for longer horizons. Investing in equity schemes requires investors to stay invested for longer durations to overcome the effect of market fluctuations.

Best midcap funds are highly liquid, and investors can redeem their investment when necessary. Mid cap funds best suit investors that are willing to invest for the long term and are not affected by short term fluctuations. Investors seeking high returns but ready to absorb more risk can invest in the top midcap funds. The best mid cap mutual funds to invest in 2022 are Axis Midcap Fund and Nippon India Growth Fund.

Features

  1. Growth Potential: Mid cap mutual funds invest in mid-sized companies that have a high potential to grow. They are often undervalued and hence are excellent picks to earn higher returns.
  2. Returns: Mid cap mutual funds give higher returns than large cap mutual funds in a bullish phase. They are highly responsive to opportunity and change.
  3. Taxation: Mid cap mutual funds are taxed like any other equity fund. In the short term (within one year), the gains are subject to STCG tax of 15%. In the long term (after one year), the gains exceeding INR 1 lakh are subject to LTCG tax of 10%. Dividends are taxed and to be paid by investors at their income tax slab rate. Dividends above INR 5,000 are subject to TDS.
  4. Risk: They are very vulnerable to business cycles and hence have a higher risk than large cap mutual funds. However, they have their business model in place and are less risky than small cap funds.
  5. Diversification: Mid cap companies operate in emerging and niche markets. It allows investors to diversify their portfolio.
  6. Liquidity: Best mid cap mutual funds are highly liquid, and investors can sell their units whenever they want.
  7. Investment horizon: Mid cap mutual funds are highly volatile in the short term. These companies take time to grow and establish. Mid cap mutual funds tend to give higher returns in the long term (10 years plus).

Tax on Mid Cap Mutual Funds

Mid Cap Mutual Funds are taxed like equity schemes. The period before completion of one year from the date of investment is considered short term. If the investment is redeemed during the short term, the gains are subject to the STCG tax of 15% (plus 4% cess). Any period after the completion of one year from the date of investment is considered a long term. Any gains above INR 1,00,000 are subject to LTCG tax of 10% (plus 4% cess).

Effective from 1st April 2020, dividends are taxed in the hands of investors at the income tax slab rate. And dividends above INR 5,000 are subject to TDS of 10%. Equity mutual funds are subject to securities transaction tax of 0.001% if investors sell the units. Investors should take advantage of investing for longer horizons and earn higher returns and enjoy tax benefits.

Frequently Asked Questions

Which is better mid cap or small cap?

Mid cap companies have a high potential to grow and become large cap companies. They have a business model in place. They give higher returns than large cap companies in the bullish phase but are vulnerable to a falling market. However, they are less risky than small cap companies.
Small cap companies have a higher growth potential. They are just entering the market and hence very young and seek to expand aggressively. They are the riskiest companies as they are highly vulnerable to market cycles. However, in the bullish phase, they perform exceptionally well in the market.
One cannot say which is better from an investment perspective. All industries follow a business cycle, and no industry or company is always in the growth phase. However, investing in large caps is considered safest, followed by mid caps and then small caps. It depends on the investor’s needs and profiles to know which is the best fit for him/her. A risk-averse investor should reconsider investing in small and mid caps. 

What does mid cap mean?

Mid cap companies are companies that rank between 101 and 250 based on market capitalization. Mid cap companies have a high potential to grow and become large cap companies. They have a business model in place. Their growth is higher than large cap companies in the bullish phase. They are less risky than small cap companies.
These companies are highly responsive to opportunity and change and vulnerable to business cycles. Best mid cap mutual funds have an asset allocation that invests at least 65% of their total assets in mid cap companies. 

Which is the best midcap mutual fund?

The best mid cap mutual funds to invest in 2022 are Nippon India Growth Fund and Axis Midcap Fund.

Are mid caps a good investment?

An investment is considered good if it meets the investor’s needs and requirements. Mid cap mutual funds best suit investors that are willing to invest for the long term and are not affected by short term fluctuations. Mid cap funds are one of the equity mutual fund types. Investors seeking high returns but willing to absorb more risk should invest in the top midcap funds.
Mid cap mutual funds invest in equities of companies that rank between 101 and 250 based on market capitalization. Their high growth potential generates higher returns than large cap mutual funds in the bullish phase. During a bear market phase, even the top funds might lose substantial value as investors prefer safer options. They are less risky than small cap funds. The best mid cap mutual funds are suited for long term investments.