Investment Shastra
Top 10 Mid Cap Mutual Funds 2021

Top 10 Mid Cap Mutual Funds 2021

Mid-cap mutual funds provide a great blend of risk and return to their investors. Mid-cap funds returns are better than large-cap funds. On the other hand, they are less volatile than pure small-cap funds.

This article covers the following:

  1. What are Mid Cap Mutual Funds?
  2. Who should invest in mid cap mutual funds?
  3. Why does growth & size strategy work?
  4. Top 10 Mid Cap Funds 2021
  5. Why choose MoneyWorks4Me?

What are Mid Cap Mutual Funds?

Mid Cap mutual funds invest at least 65% of their investment corpus in companies with medium market capitalisation. Companies between 5000 Cr to 20000 Cr market cap are usually considered mid cap companies. According to SEBI, companies ranked from 101 to 250 in terms of market capitalization are mid cap companies.

Who should invest in mid cap mutual funds?

Ideally, every investor must have some exposure to the size factor i.e. mid and small cap funds. There is enough research, first pioneered by Fama & Fench, that has proved that the size factor considerably outperforms the rest of the market. However, ensure you choose a fund with a defined investment process and a consistent track record. For details read, ‘How to choose equity mutual funds?

Like all equity products, mid cap mutual funds should be invested in with a long term view, usually 7-10 years. Ensure that mid and small cap funds together are less than 25% of your total portfolio.

For details read, ‘How to achieve the right diversification in Mutual Funds?

Why does growth & size strategy work?

Return premium exists for investing in the growth and capitalization of stocks. Mid/Small size companies are relatively less discovered and priced inefficiently; this gives enough room for outperformance in this sub-segment. Growth in such companies is usually higher than large cap peers. Research suggests, investing in smaller sized companies yields higher returns than large cap companies over the long term.

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Top 10 Mid cap funds 2021 based on 5-year rolling returns

Very Good 
Somewhat Good
Risky, Not Good 
Fund Name Returns Since inception 5 Year Rolling Return (%)
HDFC Mid-Cap Opportunities Fund
15.4 18.74
Axis Midcap Fund
18 17.69
DSP Midcap Fund
15 16.83
L&T Midcap Fund
18.6 16.36
UTI Mid Cap Fund
15.1 16.23
Franklin India Prima Fund
19.1 16.22
Sundaram Mid Cap Fund
23.9 16.14
Kotak Emerging Equity Fund
13.1 15.88
Tata Mid Cap Growth Fund
11.7 14.88
BNP Paribas Mid Cap Fund
10.7 14.76

Q – Quality; P – Performance (*for the complete & updated list click here)

1. HDFC Mid-Cap Opportunities Fund:

The fund follows the bottom-up approach to identify high-quality growth businesses for the long term. Being the most popular fund in the midcap category, the fund’s asset size is the largest as compared to its peers, which results in the fund investing almost 49% of its portfolio into large cap stocks and only about 37% in mid cap stocks. The fund might soon evolve to Large & Mid cap fund.

Check, Fund Performance

2. Axis Midcap Fund:

The fund has higher exposure to larger midcap companies with have high growth potential which is flexible and innovative. The companies should be run by experienced management and sport high liquidity. The fund also has significant exposure in large caps, while its allocation towards small caps is negligible. The fund follows a combination of the top-down and bottom-up approaches of investing with a fairly diversified portfolio of about 40-50 stocks, with single stock exposure limited to 5% of the portfolio.

Check, Fund Performance

3. DSP Midcap Fund:

The fund looks at investing in category leaders that have a higher growth potential than the overall market and are efficiently run (ROE > 15-16%) and managed by very capable and competent management with no corporate governance issues. The fund has a 100% track record of beating its benchmark.

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4. L&T Midcap Fund:

L&T Midcap Fund follows a bottom-up style of investing. The fund manager is actively looking for investment opportunities arising out of the shift from unorganized to organized sector and significantly higher growth in smaller sectors of the economy. It looks at investing in companies trading at reasonable valuations.

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5. UTI Mid Cap Fund:

UTI mutual funds have the advantage of UTI’s vast research and excellent management. The fund manager follows a conservative style of investment with a blend of Value and growth strategies. With CIO Vetri Subramaniam at the top pushing for style discipline, investors can be assured of process consistency.

Check, Fund Performance

6. Franklin India Prima Fund:

Fund Manager R Janakiraman has managed the fund since Feb 2011 and his experience shows in the fund’s performance. The fund looks at investing in fundamentally strong companies’ i.e. clean balance sheets, consistent earnings growth, high ROCE/ROE, and high corporate governance standards with a growth focus. The fund manager is willing to bear short term underperformance and has stuck to his investment process in the face of volatility. Investors should bear in mind the current uncertainty around the fund house given the saga unfolding in its debt funds.

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7. Sundaram Mid Cap Fund:

The fund manager has changed from S Krishnakumar to S. Bharath in Feb 2021. At this point, we aren’t sure if the same investment strategy will be followed. Under the previous fund manager, the fund followed a buy and hold approach and invested in fundamentally strong companies with high growth potential and pricing power.

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8. Kotak Emerging Equity Fund:

Kotak Emerging Equity Fund holds good quality and mostly fairly valued stocks. The fund follows growth at a reasonable price investment strategy. In past, it has performed consistently vs its own benchmark. After the current management took over under Nilesh Shah and Fund Manager Pankaj Tibrewal, the fund has a 100% of track record of beating its benchmark every three years earning its full marks for consistency.

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9. Tata Mid Cap Growth Fund:

True to its mandate, the fund invests largely in mid cap companies. The fund follows growth at a reasonable price strategy.

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10. BNP Paribas Mid Cap Fund:

The fund invests primarily in high growth opportunities in the mid-capitalization segment. The fund has managed to beat its benchmark consistently over a 5 year period.

Check, Fund Performance


Why choose MoneyWorks4Me?

There are close to 350 equity mutual funds to choose from. For a retail investor, it becomes an uphill task to choose funds that are worth investing in. It is even more difficult to invest in them at the right time. MoneyWorks4me can make these decisions much easier for you.

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Aliya Sayyed

Manager - Equity Research; Total 10 years works experience ranging from equity analysis, portfolio management, and financial planning. MBA in Finance. Passionate about equity research. Likes reading Finance, business, and classic fiction. Spends free time with friends and family.