What Should You Know about Mid Cap Funds Before Investing in Them?
In the past few years, midcap funds have gained a lot of popularity. They have become one of the favourite spots of investment for the investors in India. Moreover, the craze of mid cap funds saw an uprising and absorbed many small cap funds into this category. However, with such a surge in the product range it has become reasonably difficult to choose the best product for making a portfolio. In addition, there are certain clichéd theories attached to investing in this category that resist the investors from taking up this option of investing.
Here, we have attempted to reason with all the beliefs floating around midcap mutual funds, and have tried to establish the reality in its truest form. So without further ado, let’s begin!
The Common Beliefs about Midcaps
There are certain beliefs about midcap mutual funds that have been there for years. While some of them still hold true, most of them have worn out with time. MySIPonline’s expert reviewers have penned down some of the most common beliefs about midcaps, explaining the other side of the coin.
• They are for the richÂ
If you have been resisting an investment in midcap funds just on this notion, then you have been missing on a glorious opportunity. For understanding whether a fund sells expensive or cheap, it is important to understand who you are comparing it with. If you compare it with established fund categories, then of course you’d find the operating expense and buying rates of midcaps slightly higher, in which case the comparison is absolutely irrelevant. So yes, midcaps aren’t really only for the rich.
• They are very risky
Risky, yes. Very? Certainly questionable. Midcap funds invest in stocks of companies that are new in the market and still have a long way to go before they turn adults. In these cases, the risk tends to remain high as the stability is far from reality. So, while midcap mutual funds may appear a risky bet, the rewards equalise for the risk taken. Plus, they are a wonderful source of diversification that makes them a must have option in your portfolio.
• They do not pay well
If you have been staying in the illusion that midcaps are lousy payers, then it’s certain that you’ve been holding on to the wrong belief. Midcap mutual funds, as known to the world, are famous for their high return capacity which is obviously the payback for the risk that they dwell. Reports suggest that some of the best performing midcap funds in India have yielded returns as high as 21% in the last three years, which makes it certain that this category does pay well for all the risk that it laden its investors with.
What’s Next?
In the light of the above explanation given by the experts at MySIPonline, it is fairly reasonable to say that midcap mutual funds are indeed a fruitful bet and one should not skip an opportunity to invest in them. However, the catch here is to identify the top and best performing midcap mutual funds that can make it worth the investors’ money. So, to make it easier for the investors, here are some honorary mentions: -
• L&T Midcap Fund (G)
• Axis Midcap Fund (G)
• DSP Midcap Fund (G)
• HDFC Mid-cap Opportunities Fund (G)
• Kotak Emerging Equity Scheme (G)
So, if you have some high aspirations and want to achieve them ASAP, then it’s high time that you take investing in midcaps seriously. The above honorary mentions are some of the nicest options available in the market, and can be found at MySIPonline.