Best Mid-Cap Mutual Funds to Invest in 2019

Generally, investors having a high-risk appetite consider mid-cap companies for investments. Mid-cap companies are those whose market capitalization is between $2billion and $10 billion. However, please note that these figures are only indications; one investor may regard a $5 billion cap-company as big, while for another, the same company might be small. An investor aiming at higher returns and willing to wait for a 3-5 year period can consider investing in mid-cap mutual funds. Before taking any investment decision, you must check your risk appetite. This article will give you the top performing mid-cap funds of 2019 which will help you in achieving your financial goals or objectives.

Best Mid-cap Mutual Funds to Invest in 2019

Benefits of Investing in Mid-cap Funds

During stock market rallies, some stocks in mid-cap mutual funds may outperform those of large-cap companies. In a bear phase, the same stocks might underperform, so investors must be ready for volatility.

The biggest advantage of investing in mid-cap mutual funds is that companies in this portfolio are often under-researched. Many investors either do not understand such companies or have a sketchy knowledge about them. Smart investors do detailed research of these companies and often get good returns. In the case of large-cap mutual funds, the portfolio companies are quite well known so there are many takers for those schemes.

Research has indicated that over the last decade, mid-cap mutual funds have delivered nearly 400% returns while the yield from large caps has been 350%. In terms of volatility, the standard deviation of large-caps is half of that of mid-cap mutual funds, so it makes sense to calculate the trade-off between risk and return.

Things to Keep in Mind Before Investing in Mid-cap Funds

● Performance of the asset management companies

Check the yields of these companies since their inception. The best mid-cap mutual funds companies deliver consistent growth over a period of time. Do not go by the compounded growth rate since their inception, alone. This figure may look tempting because of the performance of a particular industry sector and may not represent secular values.

● Portfolio of these companies

Investors should actively check the portfolio of these companies. Do your own research and find out the performance of these companies in the last 5-10 years. It is also important to note the performance of the industries that these companies represent. Research about those mid-cap mutual funds companies that have holdings in sectors like construction, drugs, transport, healthcare etc. Companies in these sectors stay in business for a long time.

Very importantly, it is advisable to arrive at your risk appetite before you settle for your preferred mid-cap mutual funds. Industry experts suggest that it is alright to park 30-40% of your funds in your preferred fund company.

● Fund manager

Every fund is managed by a fund manager. You can check his or her performance online. This information is readily available.

● Minimum investment

The minimum investment in most of the mid-cap mutual funds is Rs. 5,000. For most investors, this figure is affordable.

● Exit load

Most mid-cap mutual funds charge an exit load from their investors. This is the money charged from the investor while he/ she is exiting from the scheme. Typically, this figure is represented in a percentage form. Mutual fund companies typically charge 1% as exit load if the investment is redeemed before 365 days (1 year).