Best Mid-cap Mutual Funds for SIP

There is a perception that mid-cap stocks are risky. This is partly right, as some risks are directly related to size. One more reason is that mid-caps are under-researched and, therefore, more likely to be priced wrongly. Investors, however, can benefit from this by identifying potential winners early.One thing is very clear that there is a perception that investing in mid-caps increases portfolio risk. That is why many people are reluctant to invest big amounts in these stocks.The biggest issue with investing in stocks is deciding when to exit. And considering that mid-cap stocks are highly volatile, having an exit strategy is a must. Most times investors enter at peak valuations. Even if they buy at the right time, it is difficult to decide when to sell.It doesn’t mean that all mid-cap stocks are risky. Investors should have a long-term horizon to avoid panic during volatility.

“Hard to believe papa was once a kid” goes an ad-line of a mutual fund scheme that invests in mid-cap stocks. Indeed it’s hard to believe Infosys and Airtel were lesser-known companies 15 years ago. Today they are among the heavyweights of the country’s two most well-known large-cap indices ‘ the Bombay Stock Exchange’s Sensex and the National Stock Exchange’s Nifty.

Anyway,always I am in favour of moderate investment strategy.Here also it is better to invest in mid-cap stocks through SIP of mid-cap mutual funds.Going with mid-cap funds can be rewarding for your investment portfolio considering the returns they can deliver. However, you must be invested for a long time period and stay with till the cycle unfolds. Ideally a mid-cap exposure of 25-30 % in your portfolio should be good. Investors who take a higher bet, being attracted by fascinating returns, should remember that their portfolio can see much higher downfall during adverse scenario which they should be ready to bear. Fund manager is an essential ingredient to the success of a mid cap fund. Funds where fund manager stick longer do well in long term than funds which see a higher movement. Lastly the corpus of the fund may be a drawback considering the limited scope of mid-caps stocks. For example, ICICI Pru Discovery has become a multi-cap fund now. Invest in mid-cap funds to enhance your portfolio returns but do a wise selection, aim longer horizon and do not bet too much of your money.

To the best of me,follwing two stocks are better among the mid cap categories there are mid and small cap funds which has done exceedingly well in last five years.But invest through SIP route only to balance purchase value.And mutual fund investment is subject to market risk.

[1] Franklin India Smaller Companies Funds- G[Small Cap]

1 year returns(% Annualized) : -2.4
2 year returns(% Annualized) : 41.5
3 year returns(% Annualized) : 30.0
5 year returns(% Annualized) : 22.4

[2] HDFC Mid Cap Opportunities-G [Mid Cap][BEST]
1 year returns(% Annualized) : 6.2
2 year returns(% Annualized) : 33.7
3 year returns(% Annualized) : 24.0
5 year returns(% Annualized) : 19.2
A Systematic Investment Plan or SIP is a smart and hassle free mode for investing money in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.

 

 

 

Ref :

  1. http://www.moneycontrol.com/news/mf-experts/should-you-investmid-cap-equity-mutual-funds_5207041.html
  2. http://www.businesstoday.in/moneytoday/investment/financial-tip-how-to-choose-the-best-mid-caps-to-invest-in/story/204756.html
  3. http://www.businesstoday.in/moneytoday/cover-story/best-mid-cap-stocks-in-the-market-hold-on-to/story/17259.html
  4. http://timesofindia.indiatimes.com/business/mf-simplified/articles/What-is-a-Systematic-Investment-Plan-How-does-itwork/articleshowhsbc/24862593.cms
  5. http://www.moneylife.in/site/userimage/image/midcap%20fund2.jpg [Image]

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