Mid-Cap Funds

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Mid-cap funds are a special type of mutual fund wherein, the corpus accumulated is invested in small or medium sized companies. With the rise of large caps the heavy weight investors like the mutual funds and Foreign Institutional Investors are increasingly investing in mid cap funds.

The economic renaissance earnest during the early 1990s in India, witnessed increased economic activity in the Indian financial market. The Indian financial market and its regulatory also matured with the incremental growth of the said market.

The mutual market funds in India come under the purview of the Association of the Mutual Funds of India (AMFI). Further, the functions of the AMFI are being regulated by the Securities and Exchange Board of India (SEBI).

Top 5 Mid Cap Equity Funds



Definition and features of the Mid-Cap Funds

Mid-cap funds are a special type of mutual fund wherein, the corpus accumulated is invested in small or medium sized companies. In the absence of any standardized definition or definite classification of small or medium sized company, each mutual fund classifies small and medium sized companies according to its own policies. In general, companies with a market capitalization up to ` 500 crores are regarded as small and companies with a market capitalization over ` 500 crores but below ` 1,000 crores are defined as medium sized by the mutual fund industry. Mid-cap funds bear high risk factors and thus offer high returns in case of positive movements of the indexes.

Further, opportunity of investment in Mid-cap funds is high due to low identification factor in the market. Another important feature of these Mid-Cap Funds is that they tend to grow in size as more investors gets involved. The net effect is that, huge amount of money are invested against few stocks. Experts are of the opinion that investments in Mid-Cap Funds should follow investment patterns of sectoral funds and one should not focus only on these funds alone. Further, investment in Mid-Cap Funds should have long term perspective.

With the rise of large caps the heavy weight investors like the mutual funds and Foreign Institutional Investors are increasingly investing in mid cap funds. However investment in Mid-cap funds should be undertaken with caution since these tend to be volatile because of the high risk involved.

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