How Can You Grow Your Earnings by Investing in Mid Cap Funds?

On the track to get down China from its current position and becoming the world's most financially developed country, India's economy is suffering from some growing pains. But there are still great opportunities waiting for investors looking to expand their portfolios for long-term into an emerging market.

                          “In investing, what is comfortable is rarely profitable.”

Quoted by Robert Arnott, which means that at points an investor has to step out of his comfort zone in order to realize the significant gains. Big fortunes do not come very easily. The above lines are perfectly suiting the mid-cap category of mutual funds, which focuses on making investments in the companies with market capitalization in the middle range of stocks in the invest-able market. An investor seeking to invest in mid-cap funds cannot make wealth in a short time and also has to stomach high risks. Let’s know more about this category of mutual funds!

What are mid-cap mutual funds?

Mid cap mutual funds, as the name suggests, are the schemes which invest in stocks of large companies or stocks with large market capitalization. In this regard, the word ‘cap’ means the market capitalization or size of the company listed. For being a mid cap, the market capitalization of the companies should range between Rs. 500 crore to Rs. 10000 crore.

Who should invest in?

It is the best-suited to the investors who are seeking rapid growth and high risk appetite as compared to large-cap funds. Mid-sized companies offer fast earnings and steep growth on being volatile on the stock index. Investors who are ready to invest with the volatility of these stocks on the expectation of fascinating returns should surely go ahead with mid-cap funds.

Advantages of mid-cap funds:-

• Several funds in the mid-cap category have outperformed the large-cap funds and this performance will not be affecting in the near future anytime. 
• They offer high growth opportunities than the large cap funds.
• They contain low risk as compared to small-cap funds.
• They even provide huge opportunity to intelligent investors of growing their money quickly. 
• There is more liquidity in mid-cap funds than small cap schemes.
   

Performance of some of the best mid cap mutual funds

Things to consider as an investor:-

• Performance of the fund should be evaluated before making the investment. An investor should check the performance of the mid cap funds in both the bullish and bearish market cycles. 
• Investment horizon, to get the benefits of investing in mid-cap funds, an investor must be willing to give a time period minimum of 7-10 years to his fund. Since equity investments are volatile in the short run and therefore can make more sense from an investing point of view to hold for longer.

One should seek guidance before making investment decisions in mid cap mutual funds as they are more risky and volatile investing option. A potential investor can reach to our team of financial experts at MySIPonline to gain further guidance and knowledge on investing.