Mid-cap mutual funds are gaining a lot of traction these days. Many investors are inclined towards investing in them because they are regarded as the future market leaders. Mid-cap mutual funds typically invest in mid-size companies. These companies have tremendous growth potential and are likely to offer better returns on investment. The right business strategy, good management and strong fundamentals make mid-cap companies grow rapidly.
This article talks about the meaning of mid-cap mutual funds, who can invest in them, the advantages of investing in them and more.
As mentioned earlier, mid-cap mutual funds typically invest in mid-cap companies. These companies have a market capitalization between Rs. 500 crores and Rs. 10,000 crores. Out of the entire market cap of all the BSE listed companies, mid-cap companies cover 80 to 90 percent share. These companies are listed on the BSE Midcap Index. As per SEBI’s recent guidelines, a mid-cap segment comprises of stocks that are ranked from 101 to 250 by market capitalization.
Mid-cap mutual funds are ideal for investors who have a longer investment horizon of 7 to 10 years and have a bigger risk appetite. Mid-cap mutual funds are known to generate high returns commensurate with high risks. Therefore, if you consider investing in mid-cap mutual funds, you must be ready for the possibility of bearing moderate losses on your investments.
It is advisable that new or first-time investors should stay away from mid-cap mutual funds because their risk-bearing capacity is comparatively low.
However, before you consider investing in mid-cap mutual funds, there are a few things you must consider for enhanced benefits.
Investing in mid-cap mutual funds can be very rewarding. They provide great diversification to your overall portfolio and help you earn high returns on your investments. All you need to do is, take care of the risk exposure and invest accordingly.
For any help related to investments, you may contact Kotak Securities.
0 people liked this article.