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Mid Cap Mutual Funds - Features and Advantages

2 Mins 18 Apr 2022 0 COMMENT


When it comes to investing in mutual funds, knowledge is everything. Knowing what kind of mutual fund you are investing in gives you a clear picture of the growth or returns to expect. For instance, understanding the type of market capitalisation of the companies in a fund can give you a peek into the investment risks and subsequent returns. 

There are four kinds of mutual funds depending upon the market capitalisation of the companies they invest in:

· Large-cap funds

· Mid-cap funds

· Small-cap funds 

· Multi cap funds 

This article will explore what mid-cap funds are, their features, and the advantages of investing in them. 

Additional Read: 7 Reasons to Invest in Mutual Funds

What Are Mid Cap Mutual Funds?

The Securities and Exchange Board of India has categorised companies into different buckets depending upon their market capitalisation. The first 100 companies with the largest market cap are called large-cap companies. Companies ranging from 101 to 250 in terms of their market cap size are mid-cap companies. The rest are small-cap companies. 

Mid-cap growth funds are equity mutual funds that invest at least 65% of their funds in mid-cap stocks. 

Features of Mid Cap Growth Funds

1. Competitive Performance 

Mid-cap funds invest in mid-cap company stocks. These companies have the potential to grow and can be bumped up to large-cap companies if they perform well enough. They have immense growth potential and provide competitive returns, reflected in the fund’s performance. 

2. Risk Factor

Mid-cap growth funds are riskier than large-cap funds because they have companies still in the growth stage. Not all mid-cap companies grow to become large-cap companies. Some may not deliver the desired returns. On the other hand, they are less riskier than small-cap companies. 

3. Returns 

Given their growth potential and risk factor, mid-cap companies provide better returns than large-cap companies in the long run. This reflects in the performance of mid-cap growth funds as well. 

4. Suitable for Long-Term Investors 

Mid-cap growth funds are most suited for long-term investment because they perform better over the long run. This is because the true growth potential of the companies that these funds invest in is only realisable in the long run. 

Advantages of Mid Cap Growth Funds

1. Wealth creation

Mid-cap funds have good growth potential in the long term. For investors who make investments in these mutual funds for a long term horizon, the possibility of making handsome returns is high. This, in turn, provides the opportunity for long term wealth creation. 

2. Diversification

Mid-cap funds invest in a variety of mid-cap companies spanning across different sectors. This ensures that your investment is well-diversified across various industries in the country. 

3. Liquid Funds 

These funds are open-ended equity mutual funds that can be liquidated at any time. They do not have a lock-in period unless they are Equity Linked Savings Schemes. You can sell the units in these funds at any time in case you need money. 

4. Professional Management 

You can benefit from the professional management of mid-cap funds. Only experienced and knowledgeable fund managers helm mid-cap funds, which can be advantageous to you in terms of your returns. 

Additional Read: A Guide to Selecting the Best Mid-cap Fund


Investors with a medium risk appetite and seeking high returns can turn to mid-cap growth funds for investment. They provide higher returns than large-cap funds and are well-diversified across different sectors. If you want to invest in mid-cap funds, check out the offer documents at your preferred AMC or broker and make your investment now. 

Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. Please note, IPO related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. ICICI Securities is also a BRLM to the issue. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing.