What are Midcap Funds
Midcap funds are equity mutual funds, which have to invest at least 65% of their total assets in midcap companies. According to the SEBI regulations, midcap companies are those ranked from 101st to 250th in terms of full market capitalisation.
Why Invest in Midcap Funds
Midcap companies have the potential of generating faster earnings growth than large cap companies. These companies usually belong to high growth sectors or have a niche market segment. Midcap companies are also better positioned to derive greater benefit during economic revivals. However, these companies are relatively under-researched with significant gaps between their intrinsic values and market price. Fund managers accurately identifying these gaps can exploit them to generate higher returns than the broader market over a period of time.
Table of 10 Best Midcap Funds:
| Fund Name | Returns (% p.a.) | |||
| 1 year | 3 year | 5 year | 10 year | |
| Invesco India Mid Cap Fund | 16.68 | 29.24 | 30.27 | 19.41 |
| Motilal Oswal Midcap Fund | 4.42 | 29.19 | 35.14 | 18.45 |
| HDFC Mid Cap Fund | 5.55 | 26.54 | 30.27 | 18.17 |
| Edelweiss Mid Cap Fund | 7.09 | 26.02 | 31.22 | 18.79 |
| Nippon India Growth Mid Cap Fund | 5.39 | 25.72 | 30.05 | 18.09 |
| HSBC Mid Cap Fund | 3.32 | 24.53 | 25.55 | 16.78 |
| Mahindra Manulife Mid Cap Fund | -1.71 | 24.34 | 28.98 | – |
| ITI Mid Cap Fund | -3.65 | 24.34 | – | – |
| Sundaram Mid Cap Fund | 5.12 | 24.04 | 27.81 | 15.25 |
| Franklin India Mid Cap Fund | 2.46 | 22.78 | 25.56 | 15.91 |
Data as on August 13, 2025
Risks of Investing in Midcap Funds
Being emerging companies, midcap companies carry higher risk than their large cap counterparts. Midcap companies also have lower capacity to deal with changing business cycles and more prone to price volatility. Hence, midcap funds too are relatively more volatile in the short-term. However, they usually beat large cap funds in the long term.
Who Should Invest in Midcap Funds
Investors with higher risk appetite and long term investment horizon should opt for midcap funds. Ideally, investors of midcap funds should stay invested for at least 7 years and above to derive the maximum growth potential from an entire business cycle.
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5 Comments
Hi,
I am investing in Sundaram Mid Cap-Regular growth, since April 2017 but seeing only negative response and after comparing with others its performance is not good. Should I continue with it or switch to any other mid cap, please suggest.
Thanks,
Jai Prakash
You can consider shifting to any of the top 10 midcap funds mentioned in the table based on their past 5 years & 7 years returns. While investing in these funds, opt for their direct plans. The lower expense ratios of direct plans allow them to generate higher returns than their regular counterparts. The outperfromance of returns can grow up to significant one if you stay invested in their direct plans over the long term.
Dear Mam I am a new investor in mutal fund I want invest through SIP 5000 per month. I want two small cap two midcap and one multicap my age is 38,I am looking for long term investment(10years). Kindly suggest me best fund in these category.
Dear Mr. Hari, my advise is you are a new investor so you should start with large cap funds. Start SIP in two large cap funds Rs.2,500 each at least for 5 to 7 years. Remember the first thing which is needed for investing in mutual fund via SIP is patience. Forget small cap funds at this stage.
Mr. Subhash Chander is right. You must start your investments with Large Cap funds as these invest in companies with large capitalisation and hence they are less affected by market downturns. Whereas, small-cap funds are largely affected by bearish market conditions.