Top Mid-Cap Funds for SIP in 2024

Investing in Mid-Cap Funds through a Systematic Investment Plan (SIP) is a smart way to grab the growth potential of mid-sized companies over the long term. Mid-Cap funds offer a balanced approach, providing an opportunity for significant returns.

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SIP Benefits
Start SIP with as low as ₹1000
Start SIP with as low as ₹1000
No hidden charges
No hidden charges
Save upto ₹46,800 in Tax
Save upto ₹46,800 in Taxunder section 80 C
Zero LTCG Tax
Zero LTCG Tax^ (Unlike 10% in Mutual Funds)
Disciplined & worry-free investing
Disciplined & worry-free investing

Top SIPs to Invest in 2024

  • Insurance Companies
  • Mutual Funds
Returns
Fund Name 3 Years 5 Years 10 Years
Top 200 Fund Tata AIA 23.15% 27.3%
19.47%
View Plan
Virtue II PNB Metlife 21.78% 23.76%
17.76%
View Plan
Pure Equity Birla Sun Life 18.83% 19.17%
16.34%
View Plan
Growth Opportunities Plus Fund Bharti AXA 17.85% 18.97%
15.65%
View Plan
Pure Stock Fund Bajaj Allianz 17.49% 18.39%
15.52%
View Plan
Blue Chip Fund HDFC Standard 14.09% 14.83%
12.85%
View Plan
Growth Super Fund Max Life 14.38% 15.26%
12.72%
View Plan
Multi Cap Growth Fund ICICI Prudential 15.63% 13.98%
12.51%
View Plan
Equity Fund SBI 14.73% 14.91%
12.42%
View Plan
Growth Plus Fund Canara HSBC Oriental Bank 12.78% 12.27%
10.7%
View Plan

Updated as on December 2023

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Returns
Fund Name 3 Years 5 Years 10 Years
Large Cap Fund Nippon India 24.99% 15.06%
16.79%
Bluechip Fund SBI 17.71% 14.27%
15.41%
Large Cap Fund Edelweiss 16.83% 14.35%
14.28%
Frontline Equity Fund Aditya Birla Sun Life 17.52% 13.21%
14.34%
Bluechip Fund ICICI Prudential 20.34% 14.76%
14.88%
Large Cap Fund Mirae Asset 14.85% 12.99%
16.34%
Bluechip Equity Fund Canara Robeco 15.01% 15.14%
14.38%
Bluechip Growth Kotak 16.41% 14.67%
14.49%
Large Cap Fund Baroda BNP Paribas 15.89% 15.08%
14.61%

Updated as on December 2023

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What are Mid-Cap Funds?

Mid-cap funds invest in mid-sized companies with a market capitalisation in the middle range of listed stocks. This typically means companies with a market cap between Rs 5,000 crore and Rs 20,000 crore. Mid-cap companies often have higher growth potential than large-cap companies but also carry more risk. As a result, mid-cap funds can be more volatile than large-cap funds, but they also have the potential for higher returns.

What are the Advantages of Mid-Cap Funds?

Here are some of the advantages of investing in mid-cap funds in India:

  • Higher growth potential: Mid-cap companies are often in high-growth industries, such as technology, healthcare, and consumer goods. This means that they have the potential to grow their earnings at a faster rate than large-cap companies. It is suggested to explore the best SIP plans for mid-cap fund investments. 

  • Lower valuation: Mid-cap companies are often less expensive than large-cap companies, which means that you can buy them at a discount to their real value.

  • Diversification: Investing in a mid-cap fund can help you diversify your portfolio and reduce your overall risk.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

How Do Mid-Cap Funds Work?

Every fund, regardless of its nature, is built upon an underlying asset that generates returns. In the case of mid-cap funds, this underlying asset comprises the stocks of mid-sized companies. Investors invest their money in mid-cap funds, which, in turn, are managed by professionals who use these funds to purchase stocks of companies falling within the mid-cap category. The rationale behind this strategy lies in the potential of mid-sized companies to yield favourable returns over the long term.

Mid-cap companies, as classified by market capitalisation or market value, are positioned between large-cap and small-cap companies. According to guidelines set by the Securities and Exchange Board of India (SEBI), companies ranked between 101-250 based on their market capitalization are categorized as mid-cap companies. These entities, which may not be as substantial as large-cap corporations, are more established and have outgrown their small-cap counterparts. Some examples of mid-sized companies include well-known names such as Tata Communication, Hindustan Petroleum Corporation Ltd, and LIC Housing Finance Ltd.

During periods of economic growth, mid-sized companies often experience faster rates of expansion compared to large-cap or blue-chip companies. However, it is important to recognize that during economic slowdowns, mid-cap companies may be more vulnerable to adverse effects. This inherent volatility is a characteristic that investors should consider when evaluating mid-cap funds as part of their investment portfolio.

People Also Read: SIP Calculator

Who Should Invest in Mid-Cap Funds?

Mid-cap funds aren't suitable for everyone, but they can be a good fit for certain investors depending on their risk tolerance, financial goals, and investment timeline. Here's a list of who should consider investing in mid-cap funds:

  • Moderate to high-risk appetite: Mid-cap funds experience higher volatility than large-cap funds, meaning your investment value can fluctuate significantly. You should be comfortable with these fluctuations and have a long-term horizon to ride out market downturns.

  • Long-term investment horizon: Aim for at least 5-7 years, ideally 10+ years, to allow mid-cap companies time to grow and potentially deliver higher returns. Short-term goals are not suited for these funds due to their volatility.

  • Seeking higher growth potential: Mid-cap companies often operate in high-growth industries and can outperform large-caps over the long term. If you're looking for larger potential returns compared to large-cap funds, mid-caps can be a good option.

  • Diversification: Mid-cap funds can add diversification to a portfolio containing large-cap funds, reducing overall risk by spreading investments across different market segments.

  • Younger investors: Younger investors typically have a longer investment horizon and can weather market volatility better than older investors nearing retirement.

What are the Taxation Rules on Mid-Cap Funds?

Taxation on mid-cap funds in India depends on the holding period: the time you hold the investment before selling it. Here's a breakdown:

  1. Short-term capital gains (STCG):

    • Holding period less than 1 year

    • Taxed at 15% (plus applicable cess & surcharge)

    • Applicable to any profit earned on selling units within 1 year of purchase

  2. Long-term capital gains (LTCG):

    • Holding a period of 1 year or more

    • Taxed at 10% (plus applicable cess & surcharge) on gains exceeding Rs. 1 lakh per year

    • No tax on LTCG up to Rs. 1 lakh per year

    • Indexation benefits not available for mid-cap or large-cap funds after July 1, 2014

How to Invest in Mid-Cap Funds?

Investing in mid-cap funds through Policybazaar Money is a straightforward process. Here's a simple guide to get you started:

  • Create an account on Policybazaar’s website by providing basic details and completing KYC verification.

  • Research and compare different Mid-Cap Funds based on past performance, expense ratio, investment strategy, and fund manager's experience.

  • Policybazaar offers a comparison tool for funds, which can be a starting point for your research.

  • Once you've chosen a fund, you can invest through a lump sum payment or set up a regular SIP investment.

  • Monitor your investment performance regularly through the platform's dashboard.

FAQ's

  • What is the recommended duration for staying invested in Mid Cap Funds?

    Since Mid Cap Funds function as equity funds involving investments in company stocks, it is advisable to maintain an investment horizon of at least 5 years.
  • Where do Mid Cap Funds deploy their investments?

    Mid-Cap Funds are mandated by regulations to allocate a minimum of 65% of their portfolio to stocks of companies ranked between 101-250 in India, based on market capitalization. Many funds in this category also diversify by including a portion in either large caps or small caps. Large caps contribute stability to returns due to lower volatility, while the addition of small caps aims to enhance potential returns. However, this diversification also introduces additional portfolio risk, underscoring the importance of reviewing the fund's portfolio before making an investment.

+For Mutual Fund midcap category Returns https://www.morningstar.in/tools/mutual-fund-category-performance.aspx & for Insurance midcap fund category Returns- https://www.morningstar.in/tools/insurance-fund-category-performance.aspx
*Past 10 Year annualised returns as on 01-12-2023
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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