It has not been the best period for equity mutual funds, since the start of the year. Covid-19 infections has led to a sharp downturn in the stock markets, though the last few weeks have seen the indices recovering significant ground. Here are 3 midcap equity mutual funds that invest in midcap stocks have the potential to generate good returns in the long term period.
DSP Midcap Fund
This fund has been rated as 5-star by Value Research and has a 4-star rating from Crisil. The 5-year returns from the fund is 8 per cent, while the 7 year returns are a staggering 17.90 per cent on an annualized basis. This is why the holdings in mutual funds should be for a long tenure, where it is possible to generate good returns.
The fund has a very strong portfolio comprising names like Divis Labs, IPCA Labs, Balkrishna Industries, Coromandel International etc.
The minimum investment required to invest through the SIP route is Rs 500 and the initial investment too is low at Rs 500. This fund has an NAV of Rs 56.66 under the growth plan. A good bet for those looking to generate decent returns in the long to medium term.
Invesco India Mid Cap Fund
This is a midcap fund and hence a significant portion of the funds (almost 78 per cent) invested in midcap companies.
Invesco India Mid Cap Fund has been rated 5-star by Crisil and has a 4-star rating from Value Research. The fund has generated a return of 6.11 per cent over the last 5 years. The returns are low, however, it is largely to do because of the collapse in the markets over the last few months. The returns on a slightly longer term time frame of 7-years is a healthy 16.52 per cent on an annualized basis.
The portfolio of the fund is rather strong and comprises names like Coromandel International, Indraprastha Gas, Balkrishna Industries, Whirlpool, Ajanta Pharma etc.
The growth plan currently has an NAV of Rs 46.82. Investors could consider investing through the SIP route as well, where the minimum amount required is Rs 1000.
Axis Midcap Fund
This fund is highly rated by both Crisil and Value Research. Both have accorded the same a 5-star rating. The fund has generated a 5-year returns of 7.63 per cent and a 7-year returns of 17 per cent on an annualized basis.
Among the top holdings of the company include names like Avenue Supermarkets, IPCA Labs, Bata India, PI Industries and Indraprashtha Gas among others. The fund has allocated almost 82 per cent to equity and the balance is placed in debt instruments.
A minimum investment of Rs 500 is possible through the SIP route. This is a good fund for those looking to generate good returns over the medium to long term. However, investors may well be warned that midcap equity funds are more risky than the larger cap funds, as midcap stocks fall faster than largecap stocks and are more volatile.
About the author
Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.