Best Mid Cap Mutual Funds

Mid cap mutual funds are suitable for diversifying your investments in companies falling in 101 to 250 ranks based on the market capitalization.

The mid cap mutual funds serve as a tool allowing investors to put money into companies that are expected to grow in the near future. Investors can get higher profits as mid cap companies do well in a stable growing economy. Mid cap companies are also more responsive to change and opportunity.

On the other hand, these companies are more vulnerable to market falls and business down cycles. The lower financial muscle diminishes the ability to withstand slowdowns. However, mid cap companies are considered to be placed in a sweet spot as they possess the flexibility of small cap and relative stability of large caps.

The midcap mutual funds enable you to invest and generate returns from this mid cap companies. It also ensures that you do not make the mistake of investing in a wrong company as most fund houses do due diligence before investing in any mid cap company.

Mid cap mutual funds as the name suggest invests in equity and equity-related securities of mid cap companies. This means that the tax treatment for mid cap mutual funds is in line with other equity mutual funds. For equity and balanced funds, investment for over period of less than 12 months is considered as short-term and warrants a short-term capital gain tax of 15 per cent. So, your returns from mid cap mutual funds will be taxed at 15 per cent if the fund was sold before 12 months.

On the other hand, if the mid cap mutual funds are sold after 12 months, a long-term capital gain tax of 10 per cent is levied provided the returns are more than 1 lakh. Mid cap mutual funds linked to ELSS plan can help you save taxes under Section 80C. However, the ELSS plans come with a lock-in period of three years.

• Mid cap mutual funds offer a range of benefits to the investors including the opportunity for long-term wealth creation. You can start SIP to inculcate the habit of regular saving and regularly invest to meet various goals.
• Mid cap mutual funds invest in companies that are relatively lesser-known, creating opportunities for huge gains. Mid cap companies have a comparatively lower risk than small cap companies and yet come with a potential for returns higher than the large cap companies.
• Mid cap mutual funds provide a high amount of flexibility to the fund manager. If you invest in best mid cap growth mutual funds, the fund will reinvest the profit allowing you to earn returns on profits leading to huge returns over a long-term investment horizon.
• Certain mid cap companies operate in the niche market, allowing you to diversify your portfolio while balancing the risk. Since mid cap companies are highly volatile in changing market conditions, seasoned investors can earn decent returns during bull markets.