While the current stock market dynamics are dominated by concerns over higher oil prices, the rupee's weakness, rising US bond yields, and foreign capital outflow, experts believe this is the time investors should consider mid-caps over large-caps and go through the systematic investment plan (SIP) route for wealth creation in the medium to long term.
According to experts, the recent pullback in mid-cap stocks has made this category attractive at current levels.
Mid-cap funds focus on investing in companies that have delivered above-average growth in the past. The key characteristics of this category of mutual funds lie in their emphasis on capital appreciation rather than regular dividend payouts. The category has given strong returns to investors.
For example, the Nippon India Growth Mid Cap Fund Regular- Growth Plan, which was one of the first mutual funds from Nippon India, launched in 1995. If an investor had done a lump-sum investment of ₹1,00,000 when the fund launched, that would be worth ₹4.3 crore today. The fund has delivered a CAGR of close to 22%, meaning a one-time lump-sum investment made at launch has grown nearly 425 times.
The Nippon India Growth Mid Cap Fund has also never gone below its face value of 10 in the last 3 decades. In the last 5 years, the top 3 funds in the category have all given 20% plus returns. Nippon India Growth Midcap Fund leads the table with 22.62%, followed by Edelweiss and HDFC Midcap Fund at 21.30% and 21.12%, respectively.