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6 Best Midcap Mutual Funds To Invest For Solid Returns

Sunil Fernandes

Analysts have over the last few months been screaming to invest in midcap stocks, given that largecap stocks have rallied a fair bit. When economic momentum gathers steam, it's highly possible that we will see superior returns from midcaps when compared to the largecaps. Since midcap funds have not given any great returns in the last few years, we suggest that the time may just be right for them to give a handful. Here are 6 midcap stocks, with the potential to generate good returns, based on past track record, ratings of these funds and the portfolio.

Here are 6 Best Midcap Funds To Invest For Good Returns:

1. Axis Midcap Fund

If you had to invest about Rs 1 lakh a year ago, this mutual fund scheme would have given you Rs 1.17 lakhs currently. This means, you would have fetched a returns of 17.30 per cent on an annualized basis. Rating agency Crisil has accorded a 5-star rating to the fund based on various parameters.

This is robust returns for a period of 1 year. The annualized three years returns from the scheme has been fantastic and more than 18 per cent.

Investors who are looking for long-term investment, this scheme has the potential to offer very good returns. The fund is managing assets to the tune of Rs 4,140 crores, which is not really small for a largecap fund.

At the moment, the holdings in midcap stocks is almost 61 per cent, with the remaining invested in largecap stocks and liquid instruments. The portfolio of the fund includes good quality stocks including the likes of City Union Bank, Info Edge, Avenue Supermarkets, Bajaj Finance, Voltas etc.

2. Tata Mid Cap Growth Fund - Regular Plan – Growth

If you had to invest about Rs 1 lakh in this fund three years ago, it would have been worth Rs 1.38 lakhs today.

This fund has been rated 4-star by both Value Research Online and 5-star by Crisil. This is one of the best mutual fund midcap schemes to buy because of its solid portfolio, strong ratings and past track record of consistent returns.

The current NAV of the fund is Rs 148.67. The portfolio of the fund includes Bata India, PI Industries, Voltas, United Breweries etc. A large part of the portfolio is geared towards stocks from the financial services space.

The fund at the moment has more than 98 per cent of its portfolio invested in stocks. Those with a medium to long-term view can buy into the fund.

3. Kotak Emerging Equity – Growth

Kotak Emerging Equity Growth is another midcap fund that has generated good returns over a three year time frame. About Rs 1 lakh invested in the fund three ago, is worth Rs 1.38 lakhs, giving an annualized yield of 11.57 per cent.

Crisil has given a rating of four star to the Kotak Emerging Equity - Growth. About 96 per cent of the fund is invested in stocks, with 62 per cent in midcaps and the remaining in large and small cap stocks.

It's important to remember while investing in midcap equity mutual funds is that the risks are much higher, when compared to largecap mutual funds.

The holdings of the portfolio includes Coromandel International, Supreme Industries, PI Industries, Ramco Cements and AU Small Finance Bank.

4. DSP Midcap Fund - Regular Plan - Growth

The 1-year returns from the fund is in excess of 14 per cent, despite midcap stocks going nowhere in the last one year. The fund size is rather large at almost Rs 7,000 crores. The scheme has almost 92 per cent invested in stocks of which 17 per cent is in large cap stocks, 59 per cent in mid cap stocks, and a smaller component in small cap stocks. The portfolio of the fund includes names like Divis Labs, Jubilant Foodworks, City Union Bank, IPCA Labs, HDFC Bank, Exide Industries and Infosys among others. Ideally, an investor who is looking to invest for a period of around 5 years and above, should consider this fund. The risk in midcaps remains a little higher, so one has to have an appetite to take risk.

5. Invesco India Mid Cap Fund – Growth

If you had to invest a sum of Rs 1 lakh, three years ago, it would have today grown to Rs 1.41 lakh, which is pretty good returns. If you had to do a monthly SIP of Rs 10,000 each month in the fund, for three years, your portfolio would be Rs 4.01 lakhs.

Invesco India Mid Cap Fund - Growth, is another good midcap equity plan to invest in. The fund has been rated as 4-star by Crisil.

A bulk of the funds of Invesco India Mid Cap Fund - Growth is invested in good quality midcap names including the likes of Whirlpool, Coromandal International, Apollo Hospitals, Indraprashtha Gas etc.

The top 10 stocks in the portfolio form about 35 per cent of the funds portfolio. The fund currently has a net asset value of Rs 52.34.

6. Franklin India Prima Fund - Growth

This fund has a 4-star rating from Crisil and Value Research. An investment of Rs 1 lakh, three years ago, fetches Rs 1.31 lakhs today. The fund has investments in names like HDFC Bank, Kotak Mahindra Bank, City Union Bank etc. The current NAV of the fund is around the Rs 998 mark. The fund has an asset size of around Rs 7,500 crores.

In all of the mutual funds mentioned above, one can invest through the Systematic Investment Plans or SIPs.

The risks in investing in midcap stocks is rather high and hence investors should take precaution before investing. It's important to remember that there is an element of risk in equity shares and equity mutual funds. Invest if you have an appetite for risk.

About the author:

Sunil Fernandes has spent 25 years covering business and finance and equity research with leading newspapers and investment magazines in India and abroad. His expertise remains mutual fund analysis, equity research, tax planning and commodities.

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