Best Mid Cap Mutual Funds in India: Taxation, Benefits, Risks and More
A mid cap mutual fund primarily invests in mid-sized companies, offering relatively higher returns than large caps with lower risk compared to small caps. Below, you’ll find the current market’s top mid-cap funds. Mid cap mutual funds concentrate on stocks ranked from 101 to 250 in market capitalisation. They provide growth opportunities with lower volatility compared to small caps, making them ideal for long-term investors with a strong grasp of the market and a high-risk tolerance.
Best 10 Mid Cap Mutual Funds
The following is an educational list of the top mid cap mutual funds in India in 2025:
| Fund Name | Fund Size (Rs. in cr.) | Expense Ratio (%) | CAGR 3Y (%) | CAGR 5Y (%) |
|---|---|---|---|---|
| Quant Mid Cap Fund | 8,891.20 | 0.59 | 22.47 | 32.73 |
| Motilal Oswal Midcap Fund | 26,421.09 | 0.65 | 29.93 | 30.78 |
| Edelweiss Mid Cap Fund | 8,666.49 | 0.38 | 23.45 | 29.35 |
| Mahindra Manulife Mid Cap Fund | 3,529.04 | 0.46 | 21.52 | 27.60 |
| PGIM India Midcap Opp Fund | 11,284.53 | 0.46 | 11.02 | 27.58 |
| Nippon India Growth Fund | 35,277.81 | 0.78 | 22.54 | 27.42 |
| HDFC Mid-Cap Opportunities Fund | 76,060.89 | 0.76 | 24.25 | 27.15 |
| Invesco India Midcap Fund | 6,149.96 | 0.58 | 21.97 | 26.80 |
| SBI Magnum Midcap Fund | 21,818.37 | 0.80 | 16.07 | 26.19 |
| Kotak Emerging Equity Fund | 53,078.98 | 0.38 | 19.78 | 25.68 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The list of top mid cap funds is from 20th January 2025 and the data is derived from Tickertape Mutual Fund Screener, using the following filters:
- Category: Mid Cap Funds
- Plan: Growth
- CAGR 5Y: Sorted from Highest to Lowest
Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of the Top 5 Mid Cap Funds
Here is a brief overview about the top mid cap mutual funds in India. These are some of the best performing mutual funds India:
Quant Mid Cap Fund
Quant Mid Cap Fund is an open-ended equity scheme from Quant Mutual Fund that focuses on investing predominantly in mid-cap companies. By targeting this segment, the fund aims to capture the growth potential of emerging businesses that are on the cusp of transitioning into larger, more established enterprises.
Motilal Oswal Midcap Fund
Motilal Oswal Midcap Fund is an open-ended equity scheme from Motilal Oswal Asset Management Company that invests primarily in mid-cap stocks. The investment strategy often aligns with Motilal Oswal’s QGLP (Quality, Growth, Longevity, and fair Price) philosophy, aiming to identify fundamentally sound mid-sized businesses trading at reasonable valuations.
Edelweiss Mid Cap Fund
Edelweiss Mid Cap Fund is an open-ended equity scheme from Edelweiss Mutual Fund, focusing on investing in mid-cap companies (typically the 101st to 250th largest by market capitalisation). Owing to the nature of mid-cap equities, the fund can experience higher volatility compared to large-cap funds.
Mahindra Manulife Mid Cap Fund
Mahindra Manulife Mid Cap Fund is an open-ended equity scheme managed by Mahindra Manulife Investment Management, a joint venture between India’s Mahindra Group and Canada’s Manulife Financial. Given its concentrated exposure to mid-cap stocks, it carries a moderate-to-high risk profile.
PGIM India Midcap Opp Fund
PGIM India Midcap Opportunities Fund is an open-ended equity scheme from PGIM India Mutual Fund—the Indian arm of PGIM, which is the global investment management business of US-based Prudential Financial, Inc. Due to its focus on mid-cap equities, it carries a relatively higher level of market risk compared to large-cap funds.
How to Invest in Mid Cap Mutual Funds?
You can easily invest in mid cap mutual funds by following these steps:
- To invest in the best mutual funds in India, you can visit an equity investment platform such as smallcase or Tickertape.
- The next step would be to research and identify the best mid cap funds which aligns with your investment thesis. You can easily select and learn more about the best mid cap funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list by giving insights about the fund’s performance. Try it now!
- Once you have selected the funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund name in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered experts
- smallcase.com offers over 500+ stock portfolios, created by 180+ managers
- Some of the popular smallcases among new investors are as follows:
Disclosures for aforementioned smallcases
What is Mid Cap Mutual Funds?
Mid cap mutual funds primarily invest in Indian companies with a market capitalisation between Rs. 5,000 cr and Rs. 20,000 cr, typically ranked 101 to 250 by SEBI. These funds allocate at least 65% of assets to mid-cap equities, offering a balance between large-cap stability and small-cap growth. With diverse stocks across sectors, they provide an exciting opportunity to explore best mid cap mutual funds companies.
Features of Mid Cap Mutual Funds
Here are a few features of mid cap mutual funds:
- Growth Potential: Mid cap stocks, being in their growth stage, offer higher capital appreciation potential compared to mature large cap stocks, making mid cap funds attractive to investors.
- Risk Factor: While mid cap companies can potentially become industry giants in the future, they also carry a higher risk of going bankrupt if their performance falters. This risk level falls between that of large cap and small cap funds.
- Expense Ratio: Mid cap funds, like other mutual funds, entail an annual expense ratio imposed by the Asset Management Company (AMC). It’s crucial to choose a mid cap fund with a lower expense ratio to maximize mid cap mutual fund returns, but considering other factors like returns, exit load, and the fund manager’s performance is equally important when selecting the right mid cap fund.
How do Mid Cap Mutual Funds Work?
Every mutual fund, whether debt or equity, contains an underlying asset that generates returns. In the case of mid cap funds, this asset comprises stocks from mid-sized companies. Investors’ money is channeled by fund managers into these mid-sized companies, known for their long-term growth potential.
SEBI classifies these companies as mid cap based on their market capitalisation, ranking them between 101-250. Mid cap companies bridge the gap between large cap and small cap companies, evolving from the latter and aspiring to attain the status of the former. They tend to exhibit faster growth during economic upturns but are more susceptible to slowdowns.
It’s crucial to understand that mid-sized companies include well-known names like Voltas, Sundaram Finance, and Godrej Industries Ltd, dispelling any notion of obscurity.
Who Should Explore Mid Cap Mutual Funds?
Here are a few types of investors who might be interested in mid cap mutual funds:
- Risk-Ready Investors Seeking Amplified Returns: Mid-cap funds present a higher level of risk compared to large-cap counterparts, but in return, they offer a chance for returns that outpace the market. Therefore, this category is best suited for investors with an appetite for risk.
- Investors Eyeing the Long Term: Given that mid-cap mutual funds focus on companies in the process of growth, investors need to cultivate patience. These firms may not be as financially robust as their larger counterparts, and during economic downturns, they might stumble and take time to regain their footing.
- Embracing Short-Term Fluctuations for Long-Term Rewards: Mid-cap funds can experience short to medium-term fluctuations, which may lead to abrupt portfolio value declines. Those considering this category should be prepared for such ups and downs and remain focused on their long-term objectives.
How to Identify the Best Mid Cap Mutual Funds?
Consider making a checklist before identifying the top mutual funds in India in the mid cap category. Here are a few suggestions on how you can choose the best mid cap mutual funds:
- Fund Performance: Evaluate the historical mutual fund performance of the mid-cap funds you’re considering. Look at their returns over various time periods, comparing them to relevant benchmarks.
- Fund Manager’s Track Record: A skilled fund manager is crucial to the success of a mutual fund. Assess the manager’s past performance and experience in managing mid-cap funds.
- Expense Ratio: Lower expense ratios can significantly impact your returns in the long run. Choose funds with competitive expense ratios to minimise costs.
- Asset Under Management (AUM): While researching the top 5 mutual funds in india, consider the fund’s AUM. While a larger AUM may indicate the fund’s popularity, it could also impact the fund’s agility in taking advantage of mid-cap opportunities.
How are Returns Calculated on Midcap Mutual Funds?
When evaluating the best midcap mutual funds in India, it’s crucial to understand how returns are calculated. That is why we’ve prepared a comprehensive guide on how you can calculate your returns on midcap mutual funds:
Annualized Returns
Annualized returns help investors gauge a fund’s performance over various time frames. To calculate annualized returns, consider the investment duration and the growth in NAV during that period. The formula for annualized returns is:
Annualized Returns (%) = [(Final NAV / Initial NAV)^(1/n) – 1] x 100
Here:
Final NAV: NAV at the end of the investment period.
Initial NAV: NAV at the beginning of the investment period.
‘n’ is the number of years the investment was held.
Compounded Annual Growth Rate (CAGR)
CAGR provides a smoothed-out representation of returns over time. It considers the compounding effect and is particularly useful for assessing long-term performance. The formula for CAGR is:
CAGR (%) = [(Ending NAV / Beginning NAV)^(1/n) – 1] x 100
Here:
Ending NAV: NAV at the end of the investment period.
Beginning NAV: NAV at the beginning of the investment period.
‘n’ is the number of years the investment was held.
Taxation on Mid Cap Mutual Funds as per the Union Budget 2024-25
Equity Mutual Funds
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Debt Mutual Funds
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 36 months | Taxed according to your income tax slab | Taxed according to your income tax slab |
| Long-Term Capital Gains (LTCG) | More than 36 months | 10% | 12.50% |
- No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.
- Change in Holding Period for Specified Mutual Funds: Previously, debt mutual funds with a holding period of over 36 months were taxed based on the investor’s tax slab, classified as Long-Term Capital Gains (LTCG). Now, for specified mutual funds where over 65% of the investment is in debt, the holding period for taxation has been reduced to over 24 months. These funds will still be taxed according to the investor’s tax slab as either LTCG or STCG.
Hybrid Mutual Funds
| Type of Hybrid Fund | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) | Indexation Benefit |
| Equity-Oriented Hybrid Funds | 20% for holdings less than 1 year | 12.5% for holdings over 1 year, with gains up to Rs. 1.25 lakh tax-free | Not available |
| Debt-Oriented Hybrid Funds | Taxed as per income tax slab for holdings less than 3 years | 12.5% for holdings over 3 years | Not available |
Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.
Risks of Investing in Mid Cap Mutual Funds
Best mid cap mutual funds come with their share of risks that investors should be aware of:
- Liquidity Challenges: Mid-cap stocks often have lower liquidity than large-cap counterparts. This means buying and selling mid-cap equities can be less straightforward, potentially leading to wider bid-ask spreads and higher transaction costs. In extreme market situations, it can even be challenging to sell best mid cap mutual funds shares at fair market value, potentially resulting in losses.
- Market Volatility: Investing in mid-cap funds entails a higher sensitivity to market swings compared to large-cap funds. This can result in increased volatility, with mid-cap funds experiencing more significant losses during market downturns or times of economic uncertainty.
- Fee Considerations: Due to the additional research required to identify undervalued mid-cap companies, mid-cap funds often charge higher fees. While potentially higher returns may justify these expenses, it’s essential for investors to evaluate the costs associated with a mid-cap fund carefully before getting involved.
Benefits of Investing in Mid Cap Mutual Funds
Here are a few benefits of investing in the top 5 mid cap funds:
- High Growth Potential: Top performing mutual funds in the mid cap category offer substantial growth potential, often outperforming large-cap funds in delivering significant returns. However, investors must keep in mind that returns are not guaranteed.
- Diversified Portfolio: These funds explore companies with market capitalisations ranging from Rs. 5,000 cr to Rs. 20,000 cr (ranked 101-250 by SEBI), promoting portfolio diversification.
- Risk Mitigation: Investing in the top 5 mid cap funds hedges against economic downturns, reducing risk compared to direct stock investments.
- Low Entry: Investment can begin with as little as Rs. 100, making it accessible for cautious investors to test the waters.
- Regulatory Transparency: SEBI closely oversees the top 10 mutual funds in India, including best mid cap mutual funds. They ensure transparency through mandatory disclosures of NAVs, expense ratios, and month-end portfolios.
- Expert Management: Experienced fund managers handle mid-cap mutual funds, making them a reliable choice for those seeking exponential returns from well-selected mid-cap stocks.
Factors to Consider Before Investing in Mid Cap Mutual Funds
When seeking the best mid cap mutual funds, keep these vital factors in mind:
- Professional Management: Their market knowledge, investment strategy, and management style can significantly impact the fund’s performance. Thoroughly examine their track record and experience before committing your investment.
- Historical Track Record: Evaluate the fund’s historical performance, spanning different market cycles, to assess its consistency in delivering returns. Keep in mind that while past performance is valuable, it doesn’t guarantee future results.
- Expense Efficiency: Consider the expense ratio, which encompasses management fees and research costs. Comparing cost ratios across best mid cap mutual funds is essential to ensure you’re getting value for your investment.
- Risk Profile Alignment: Examine the fund’s risk profile to ensure it matches your risk tolerance. Some best mid cap mutual funds may carry higher risks, irrespective of their investment approach or sector focus.
To Wrap It Up…
In conclusion, navigating the top 5 mid cap funds requires thorough research. The ‘Best 10 Mid Cap Mutual Funds’ have been curated to provide you with a comprehensive overview of the top options available in the market. Remember, while historical performance and expert rankings provide valuable insights, it’s crucial to align your investments with your financial goals, risk tolerance, and investment horizon. Diversification, regular reviews, and staying informed about market trends are key!
Frequently Asked Questions (FAQs) on Best Mid Cap Mutual Funds
Three key factors drive the performance of a mutual fund scheme: (a) the overall market performance, (b) the risk the fund manager assumes, and (c) the value added by the fund manager, often referred to as ‘alpha.’ Over an extended investment horizon, the latter factor, alpha, emerges as the most crucial.
A mid cap fund offers increased diversification with lower risk compared to a multi-cap fund.
Investing in any stocks, including mid-cap stockss, is subject to market risk and investors should do their own research before investing.
Mid cap mutual funds balance higher returns with more volatility than large-cap funds while providing stability compared to small-cap funds, albeit with slightly lower returns. In essence, they offer a well-rounded risk-return profile.
Mid cap funds seek a balance between small cap growth and large cap stability, investing in promising companies yet to attain large cap status.
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