Midcap mutual funds allow investors to invest their capital in midcap companies. Midcap funds have the right balance of risk and return, so there is a possibility of high returns from these funds in the mid- to long term. These funds are mandated to invest at least 65% of their assets in midcap stocks.
Who should invest in midcap funds?
If your investment tenure is more than 5 years, then midcap funds can be a great option. Looking at the performance of the last 5 years, many midcap mutual funds have given annualised returns of up to 30%. What this means is that a lump sum investment 5 years ago in any of the top 5 funds would have multiplied the money 4 times.
Midcap mutual funds tend to carry higher risk compared to largecap funds because they invest in companies that are in the growth phase and may experience more volatility. These companies are not as stable as largecap companies, which are generally well-established with a proven track record. Therefore, midcap funds are better suited for investors who are comfortable with higher levels of risk and can withstand market fluctuations.
Midcap mutual funds offer investors significant potential for capital appreciation while still maintaining a level of stability compared to smaller, more volatile smallcap stocks. These funds provide a balance between growth potential and manageable risk. However, midcap funds are slightly riskier than largecap funds.
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Now before we share with you the list of the funds, do note that this is based on historical returns. And there is no guarantee that future returns will at all match the historical returns. If at all, the information that follows should give you a sense of what is possible when things go right with midcap funds.
Top 5 midcap mutual funds and their 5-year returns
- Quant Mid Cap Fund – Regular
Lumpsum return (5 years): 29.44%
Total return on investment of Rs 1 lakh: Rs 3,63,890
Total profit: Rs 2,63,890
SIP return (5 years): 26.51%
Total value of Rs 10,000 SIP: Rs 11,55,106
Launch date: 9 March 2001
AUM: Rs 8,891 crore
- Motilal Oswal Midcap Fund – Regular Plan
Lumpsum return (5 years): 27.64%
Total return on investment of Rs 1 lakh: Rs 3,39,200
Total profit: Rs 2,39,200
SIP return (5 years): 34.12%
Total value of Rs 10,000 SIP: Rs 13,82,485
Launch date: 24 February 2014
AUM: Rs 26,421 crore (As of 31 Dec. 2024)
- Edelweiss Mid Cap Fund – Regular Plan
Lumpsum return (5 years): 26.32%
Total return on investment of Rs 1 lakh: Rs 3,22,090
Total profit: Rs 2,22,090
SIP return (5 years): 28.35%
Total value of Rs 10,000 SIP: Rs 12,07,890
Launch date: 26 December 2007
AUM: Rs 8,666 crore
- HDFC Mid-Cap Opportunities Fund
Lumpsum return (5 years): 26.24%
Total return on investment of Rs 1 lakh made: Rs 3,21,020
Total profit: Rs 2,21,020
SIP return (5 years): 28.58%
Total value of Rs 10,000 SIP: Rs 12,14,490
Launch date: 25 June 2007
AUM: Rs 77,967 crore
- Nippon India Growth Fund – Growth
Lumpsum return (5 years): 25.55%
Investment of Rs 1 lakh made: Rs 3,12,310
Total profit: Rs 2,12,310
SIP return (5 Year): 27.95%
Total value of Rs 10,000 SIP: Rs 11,96,230
Launch date: 8 August 2007
AUM: Rs 35,278 crore
(Source: Value Research, Amfi, factsheets)
Understand the risk of investing in midcap funds:
If you have a higher risk tolerance and are willing to accept the potential for more volatility in exchange for the opportunity for higher returns, midcap mutual funds could be a good option for you. However, it’s important to note that these funds typically require a longer investment horizon — around 5 to 10 years — so that you can ride out market ups and downs and take full advantage of their growth potential. If you’re looking for short-term gains, midcap funds may not be the right fit.
And finally, keep in mind that ultimately where you invest should depend on your financial plan, and the asset allocation to achieve those goals. In the long term getting the planning right will have a disproportionate impact on the outcome. So be sure you get this right before you go on to fund selection.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.