Understanding Mid-Cap Funds: A Great Investment Option for Growth-Oriented Investors

Learn more about what mid-cap funds are, how they work, and the benefits and risks associated with investing in them.
3 mins
30 July 2023

Mid-cap funds are a type of mutual fund that invests in mid-sized companies, which are not small-cap or large-cap. These companies are in the middle of the market capitalisation spectrum with a market capitalisation between Rs. 500 crores to Rs. 10,000 crores. If your risk appetite is good, then mid-cap funds are just made for you.

Mid-cap companies are generally considered to be higher-risk, higher-growth companies compared to large-cap companies. You will also require an investing horizon of 8-10 years. Keep in mind that the mid-cap market offers several prospects for investment and wealth growth. As a result, it is critical to select a programme that focuses heavily on market research and identifying suitable investment prospects. Also, before investing in mid-cap funds, examine your financial goals as well as your risk tolerance and investment horizon.
At the Bajaj Finance platform, you can find several mid-cap mutual funds curated as per your investment requirement and risk appetite. Here, you can invest directly saving commission and other fees. And since it is an end-to-end online journey, it saves you time.

Important characteristics of mid-cap funds

Performance of the mid-cap mutual fund scheme: At the Bajaj Finance platform, you can find each fund scheme provides its performance history. Skim through the requisite information and thoroughly evaluate the scheme's performance before investing. Consider how the fund has performed during negative and positive market cycles. Try to understand the highs and lows to make informed selling decisions after investing.

If you are a long-term investor, you should consider this option because most stock investments are volatile and remaining involved for a longer length of time helps to secure decent returns. Mid-cap firms are expanding, and a handful of them.

Choose a fund with a low turnover rate: Choosing a fund with a low turnover rate (the proportion of the portfolio that is purchased and sold each year) is significant since a high turnover rate means greater expenses.

Choose value: If you are a value investor wanting to invest in companies that are trading at a discount, mid-cap funds might be a suitable investment because they are understudied and may have a valuation gap. As a result, during bull markets with high market sentiment, these firms tend to outperform their larger counterparts.

Study aims and risk profile: Check if the mid-cap fund's aims and risk profile correspond with your own goals. Mid-cap funds are equity mutual funds that invest a major amount of their money in mid-cap stocks that are trending upward.

Fund managers seek under-researched stocks and invest in them to maximise returns. They provide strong returns while being less volatile since they fall between the risk-return spectrums of large-cap and small-cap funds.

You will find details like investment objective, past performance, minimum investment, peer comparison, scheme allocation distribution, exit load, expense ratio and taxation details on our site to help you understand the mid-cap fund you want to invest in. There is also a Riskometer on our fund pages, which gives you a brief interpretation of risk involved with each fund and other details about how the fund is being managed.

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