Mutual funds are a diverse asset that contain various categories based on the type of assets like stocks they invest in. In this blog, we'll take a look at one such mutual fund known as mid-cap funds.
What Is A Mid-Cap Fund?
A mid-cap fund is an equity mutual fund. Like all other mutual funds, they are a pool of money managed by a professional fund manager. Mid-cap funds invest in mid-sized companies that fall between Rs.500 Crore to Rs.10,000 Crore in terms of market capitalization. This makes it less volatile in comparison to small-cap funds.
Who Should Invest In Mid-Cap Funds?
Whether or not you invest in mid-cap funds depends on your age, risk appetite, financial goals and portfolio allocation. There are certain benefits or pros of investing in Mid-Cap Funds. If these appeal to you then you must consult your wealth coach. The benefits include:
Mid-Cap funds usually outperform large-cap funds
Mid-Cap funds are less risky than small-cap funds
Mid-Cap funds offer more liquidity than small-cap funds
Mid-Cap funds invest in companies which are reasonably stable
The thing to note is that the intent to invest in mid-cap funds alone is not enough. You must ensure that your portfolio is balanced and is aligned with your risk appetite and time horizons. That said here are some reasons people invest in mid-cap mutual funds:
Higher growth potential: mid-cap companies usually perform better than large-cap funds
To diversify your portfolio: If the rest of your portfolio is low-risk & low-return
Ideal if you are an aggressive investor: You must be ready to handle volatility
Like many other investments, mid-cap funds are best for long term investors
To tell you whether you should invest in Mid-Cap funds a lot more information is required. You should never pick mutual funds to invest in on your own. Always consult a financial advisor or Wealth Coach for this purpose. You can also try Cube Wealth’s QuickSIP feature to check which funds suit your risk appetite.
Check out our video on How to Build the Perfect Investment Portfolio
Rishabh P Nair
Rishabh P Nair is the Head Of Brand Content at Cube Wealth, the Financial Freedom App with a smart Perfect Portfolio Planner. Rishabh has been weaving stories for over 10 years and prides himself on building brands with a strong identity.
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