Top 5 mid-cap equity mutual funds for long-term wealth creation

Most people argue that they don’t invest in equities as they don’t understand equity markets and stock valuations. These types of investors can opt to invest in equity markets via mutual funds. The Indian mutual fund industry is well regulated, transparent, and mature.

Jul 14, 2018 09:07 IST India Infoline News Service

Everyone wants to create wealth to meet their financial goals, but still, most of the people end up missing their financial obligations. The primary reasons behind this are that people don’t invest enough and put their money in assets which hardly beat inflation.

Equity mutual funds are one of the best ways to create wealth in the long-term in equity markets as historically, it has been seen that equity-based investments have given inflation-beating returns over the long-term despite short-term volatilities.

But most people argue that they don’t invest in equities as they don’t understand equity markets and stock valuations. These types of investors can opt to invest in equity markets via mutual funds. The Indian mutual fund industry is well regulated, transparent, and mature.

Investors can start investing in mutual funds via Systematic Investment Plan (SIP). It is a way to invest a particular amount in mutual funds regularly for a pre-defined period. Instead of timing the market, investors can regularly invest in the market and can reap the benefit of ‘Rupee Cost Averaging’.

As per SEBI guidelines, mid-cap mutual funds have to invest minimum 65% of the total asset in mid-cap stocks. In order to ensure uniformity in the classification of large-cap, mid-cap, and small-cap stocks, SEBI has also define large-cap, mid-cap, and small-cap stocks as follows:
  • Large Cap: 1st -100th company in terms of full market capitalization
  • Mid Cap: 101st -250th company in terms of full market capitalization
  • Small Cap: 251st company onwards in terms of full market capitalization
This might make it difficult for an investor to select the best mutual fund. Thus, to make the selection process easier, we have selected the five equity mutual funds to create wealth in the long-term.

Top 5 Mid-cap Mutual Funds

Scheme Name AUM
(in Rs cr)
1Y (%) 3Y (%) 5Y (%)
DSP BlackRock Midcap Fund-Reg(G) 5,266 4.1 13.5 25.8
Franklin India Prima Fund(G) 6,336 5.9 12.5 24.2
HDFC Mid-Cap Opportunities Fund(G) 19,990 6.8 14.7 26.3
SBI Magnum Midcap Fund(G) 3,521 5.2 10.3 26.6
UTI Midcap Fund(G) 3,884 3.3 8.9 26.0
(1 year returns are absolute; Returns greater than 1 year are CAGR
AUM as of June 2018; Returns as on July 12, 2018; Source: ACE MF)
 
1.      DSP BlackRock Midcap Fund

The fund follows a bottom-up approach to select the stocks and invests in stocks with consistent earnings and significant growth potential.

2.     Franklin India Prima Fund

The fund predominantly invests in midcap stocks, which tend to exhibit higher growth than large-cap stocks. It aims to identify and invest in companies that are at an early stage of their business life cycle as they have an enormous potential to grow.

3.      HDFC Mid-cap Opportunities Fund

The fund invests in companies with reasonable growth prospects with sound financial strength and sustainable business models, available at reasonably acceptable valuations.

4.      SBI Magnum Midcap Fund

The fund follows a blend of growth and value style of investing. It follows a bottom-up approach to stock-picking and chooses companies across sectors.

5.      UTI Midcap Fund

The fund uses a bottom-up approach to select companies with a good historical operating track record but is currently facing temporary headwinds in business conditions.

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