Investors in mutual funds are currently grappling with concerns over valuations within the mid cap segment, which has experienced a robust rally in recent months. This surge in mid cap stocks has resulted in handsome returns for investors, with mid cap funds delivering an average return of 32.23% in 2023. However, the impressive performance has also sparked apprehension among investors regarding the sustainability of these gains and the potential risks associated with mid cap investments.
Before delving into investment recommendations, it’s essential to understand the fundamentals. Mid cap schemes primarily allocate their investments to mid cap stocks or medium-sized companies, as mandated by Sebi norms, which classify mid cap companies as those ranked between 101 and 250 in market capitalization. These companies are often viewed as potential future leaders, presenting attractive opportunities for investors. However, investing in mid cap companies inherently entails a degree of risk, necessitating a high tolerance for volatility and a longer investment horizon, typically spanning seven to 10 years, to navigate market fluctuations effectively.
While current valuations may have reached peak levels, investors should temper expectations for quick gains and adopt a more long-term approach to their investment strategies.
For those still inclined towards mid cap investments, here are some recommended mid cap schemes to consider. It is advisable to stay updated on the performance of these schemes through regular monitoring:
Invesco India Midcap Fund: Consistently placed in the second quartile over the past two months.
Axis Mid Cap Fund: Remained in the fourth quartile for the last 12 months.
Tata Midcap Growth Fund: Maintained its position in the second quartile for seven months, following a previous stint in the third quartile for the same duration.
PGIM India Midcap Opportunities Fund: Trails in terms of quartile performance.
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