Name of Fund	5 Year Returns (p.a.)	Scheme Category
DSP Midcap Fund	17.52%	Mid Cap
L&T Midcap Fund	16.70%	Mid Cap
Aditya Birla Sunlife Midcap Fund	17.20%	Mid Cap
SBI Magnum Midcap Fund	17.49%	Mid Cap
Sundaram Midcap Fund	18.98%	Mid Cap

What are mid-cap funds?

A mid-cap fund is a collective investment fund (e.g., a mutual fund or ETF) that specifically invests in mid-cap stocks or companies whose market capitalisation ranges from largest 101 to 250th. Mid-cap funds allow investors to keep a diversified portfolio of these types of stocks with ease and cost-effectiveness.

Mid-cap stocks typically offer more growth potential for investors than large-cap stocks but with less uncertainty and threat than small-cap stocks. Mid-cap stocks are a hybrid of large-cap and small-cap stocks, providing both growth and security.

What are the benefits of investing in midcap funds?

Mid-Cap Funds has repeatedly overtaken large-cap funds. In capital markets, the mid-cap funds are almost trailing, as compared with large-cap funds. This offers companies a great chance to explore the rapid growth of using these funds in their investments. Some of the merits of investing in midcap funds are:

• Mid-cap businesses have long-run to avoid mistakes usually created by small-cap businesses.
• The liquidity is more of mid-cap funds compared to small-cap funds mid-cap funds.
• In comparison to small-cap funds, they are less volatile and large. They have a better potential for growth than the large-cap funds.
• To investors, the enticing aspect of mid-caps is that they are expected to rise and increase profits.
• It positions market share and profitability at the core of their maturity curve.
• They are still expected to be in a stage of development therefore they are regarded to be less risky than small-caps but riskier than large caps.
• Mid-cap funds are known to be a mixture of the two, providing a balance between maturity and endurance.

What is the difference between large and mid cap fund?

Meaning

Large Cap funds are open-ended equity funds that invest in large-cap stocks at least 80% of their total assets. They have an amazing track record and are credible and strong companies. They are known to have earned wealth for their shareholders.

Mid-cap funds are open-ended equity funds that invest about 65% of their total assets in mid-cap companies' equity and equity instruments. These firms have been around for some time and also have a decent track record.

Risk

Large-Cap funds are the least risky among the two because they invest in stocks of the top 100 firms.

Mid-Cap funds are riskier than large-cap funds but lesser than small-cap funds.

Returns

Large-Cap funds tend to deliver lower fluctuating and steady returns. The average returns over the last five years are 12% - 14 %.

Mid-Cap funds have better returns than large-cap funds. The average return of 5 years is 15%-18 %.

Appropriate Investor

Large-Cap funds are typically favoured by investors with a lower risk appetite pursuing investment opportunities in stock markets. It is perfect for investors who don't look for high returns.

Mid-Cap funds are favoured by investors with medium risk appetite and looking for access to the stock markets.

What are the taxability aspects of mid cap funds?

Dividend Distribution Tax

All fund houses, as mandated by SEBI, deduct a 10 % DDT before paying a dividend to unitholders.

Capital Gains Tax

You collect taxable capital gains by redeeming the units of a Mid Cap Fund. The rate at which you are taxed depends on the amount you have been involved in the scheme.

• Short Term Capital Gain: A holding period not exceeding one year. STCG is 15 % taxed.
• Long Term Capital Gain: A holding period exceeding a year. There is no up to Rs. 1 lakh tax on LTCG. Over this number, without indexing gain, LTCG is taxed at a rate of 10 %.

Which type of investors should invest in mid-cap funds?

Investors seeking options for accumulating capital more rapidly by willing to take some risk should invest in mid-cap funds. Mid-cap companies can produce higher returns based on the stock market is unpredictable. Investors who can face these portfolio fluctuations in hopes of excellent returns should invest in these funds.