NFO Pick – (Tata Nifty Midcap 150 Index Fund)

9 Jun 2025 , 09:31 AM

WHY TATA NIFTY MIDCAP 150 INDEX FUND?

The Tata Nifty Midcap 150 Index Fund, will reflect the performance of mid-sized companies in India. These are ranked between 101 and 250 on the market cap ranking scale, and this universe starts, where the large cap universe ends. Here are some compelling investment cases in favour of investing in the Tata Nifty Midcap 150 index Fund.

• The Tata Nifty Midcap 150 Index Fund offers a diversified exposure across the midcap universe. The diversification is across sectors, size, and themes. It can be a good hedge for a large cap portfolio, and also an alpha driver.
• Midcap companies have exhibited high growth attributes in the past, since their business models still offer room for growth and expansion. It offers exposure to sectors like capital goods, chemicals, healthcare etc.
• Apart from reducing the active fund manager bias, this passive index fund is a cost-effective option since the total expense ratio (TER) is meaningfully lower than the active midcap funds. This translates into higher wealth in the long run.

Having the value-add features, let us turn to who should invest in this fund.

WHO SHOULD INVEST IN TATA NIFTY MIDCAP 150 FUND?

The Tata Nifty Midcap 150 Fund would be ideally for the following investors.

• Investors who are looking for a diversified exposure to mid-caps and a low-cost entry into a diversified mid-cap portfolio.
• Investors who are seeking alpha in the equity markets by participating in the higher growth sectors. A diversified mid-cap portfolio offers better risk-return trade-offs.
• It is suited to investors looking for a very cost effective access to the mid-cap space. Being an index fund, the active selection bias and the active costs are done away.
• Investors who are looking to create long term wealth for their portfolio and to meet long term goals through a strategic satellite portfolio approach.

Let us turn to how the Nifty Midcap 150 funds in India have performed over 1 year and over the last 3 years.

HOW NIFTY MIDCAP 150 FUNDS PERFORMED

There are a total of 18 Nifty Midcap 150 Index Funds and ETFs in India, managing a combined corpus of ₹10,900 Crore. The table presents the top 8 on 3-year returns of the regular plan. Only funds with 3-year track have been shown.

Scheme Name	Regular NAV (₹)	Return (%) 1-Year	Return (%) 3-Years	Daily AUM (₹ in Crore)
Mirae Asset Nifty Midcap 150 ETF	21.7869	12.42	27.33	1,100.93
ICICI Prudential Nifty Midcap 150 ETF	22.0632	12.36	27.26	470.24
Nippon India ETF Nifty Midcap 150	220.7051	12.23	27.21	2,274.81
ABSL Nifty Midcap 150 Index Fund	23.5827	11.33	26.30	364.57
Nippon Nifty Midcap 150 Index Fund	24.1868	11.47	26.30	1,777.79
MOSL Nifty Midcap 150 Index Fund	37.1592	11.56	26.29	2,365.76
ICICI Pru Nifty Midcap 150 Index Fund	18.6668	11.29	25.98	750.02
Navi Nifty Midcap 150 Index Fund	19.7172	11.15	25.79	292.72
Data Source: AMFI

 

If you take a 1-year  perspective, funds have delivered average returns of 11.77%. However, if you consider a 3-year perspective, then the funds have delivered an average return of 26.56% CAGR. What is most interesting is that, being an index-driven fund, the variance of returns of individual funds is quite low. Hence, the risk of selection also becomes much lower in this case, as even the worst case returns are fairly attractive and very proximate to the average returns. One quick takeaway is that, due to lower cost structures, the ETF may appear to outperform the index funds. However, to get a real picture, one must also consider the brokerage costs, demat charges, and spread costs in case of ETFs.

GLANCE AT THE TATA NIFTY MIDCAP 150 INDEX FUND NFO

Here are key details of the Tata Nifty Midcap 150 Index Fund NFO.

• The NFO opened on June 02, 2025 and closes on June 16, 2025. Post the allotment of units to investors, the fund will re-open for fresh purchases and redemptions within 5 business days of allotment.
• The objective of the fund is to provide returns before expenses, that commensurate with the performance of the Nifty Midcap 150 Index (TRI). Being an index fund, this fund is subject to the risk of tracking error.
• On the risk-o-meter, Tata Nifty Midcap 150 Index Fund is classified as “Very High Risk,” due to its predominant exposure to equity instruments and also due to its complete bias in favour of mid-cap stocks.
• The Tata Nifty Midcap 150 Index Fund will be best suited to investors looking for a disciplined and passive approach to participating in a diversified midcap portfolio. Investors must be willing to take a long term view of 5-7 years, at least.
• Tata Nifty Midcap 150 Index Fund offers Regular and Direct plans. It also offers Growth option and IDCW option to investors. Kapil Menon and Rakesh Prajapati will be the fund managers for the Tata Nifty Midcap 150 Index Fund.
• Minimum application amount in NFO is ₹5,000 and in multiples of ₹1 thereof. Subsequent additional investments will also be of minimum ₹1,000. Fund will be benchmarked to Nifty Midcap 150 TRI.
• In the case of the Tata Nifty Midcap 150 Index Fund, there will be an exit load of 0.25% of the redemption value, if redeemed within 15 days from the date of allotment. However, for best results, a holding period of over 5 to 7 years is suggested.

Tata Nifty Midcap 150 Index Fund will be treated as an equity fund for tax purposes. Short term gains (up to 1 year) will be taxed at 20.8%, including surcharge. Long term capital gains (above 1 year) will be 12.5%, after the base exemption of ₹1.25 lakhs per financial year.