Nifty Mid Cap Index Funds

Nifty Midcap mutual funds invest your pooled money in mid-cap companies ranking between the 101st and 250th position in the National Stock Exchange to generate higher returns. This is a diversified and low-cost option of investment that has a potential for long term growth.

An annualised return of approximately 20%

Higher returns over the long term

Can outperform large cap mutual funds

Ideal for investors with a long-term investment horizon

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List of Best Nifty Mid Cap Index Funds Based on Last 3-Year Returns

Best Index Funds

3 Yr Returns

19% - 21%

Nifty 50

3 Yr Returns

16% - 18%

Nifty Next 50

3 Yr Returns

21% - 23%

Nifty Midcap

3 Yr Returns

24% - 26%

Nifty Smallcap

3 Yr Returns

30% - 31%

Global/US

3 Yr Returns

9% - 11%

Others

3 Yr Returns

16% - 18%

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What are Nifty Mid Cap Index Funds?

Nifty mid-cap index funds invest in mid-size companies ranking between 101st and 250th in the National Stock Exchange (NSE) on the basis of market capitalisation. These companies have a market cap between ₹5,000 crores and ₹20,000 crores. Moreover, the 150 stocks in this fund has the potential to grow in future and outperform large cap companies.

In addition, it enables you to grow your capital by offering higher returns and mitigating the risks. These funds track the Nifty Mid-cap index's performance to provide offers matching the Nifty Mid-cap index funds.

Benefits of Investing in Nifty Mid Cap Index Funds

Investing in Nifty Midcap mutual funds has certain benefits that you must consider before putting in your money. Read below to know more in details.

High Growth Potential
Since Nifty Midcap index funds invest in mid-size companies ranking on the NSE, there is a chance that these companies have higher growth potential than large-cap companies. Hence, investing in these companies for the long term will enable you to earn higher returns.
Low-Cost Investment
The fund managers do not actively participate in the buying and selling of these funds. Hence, it lowers the expense ratio of these funds, making them a cost-effective investment option than actively managed funds.
Portfolio Diversification
The Nifty Midcap index funds consist of equities of mid-size companies from different sectors. It enables investors to diversify their portfolios to a large extent and bear less risk than direct investment in these stocks.

Who should consider investing in Nifty Midcap Index Funds?

Nifty Mid-cap funds can be suitable for the following categories of investors to earn higher returns:

Investors with Long Term Investment Horizon
If you're planning to invest with a horizon extending several years, Nifty Mid-cap funds can be suitable. They're designed for those who can ride out short-term market swings to achieve substantial returns over time.
Investors with a High-Risk Appetite
These funds are more volatile than large-cap funds, making them suitable for those who can tolerate higher risk levels. The potential for greater returns over the long term can be appealing if you're willing to embrace this risk.
Investors Seeking Higher Returns
If you're aiming for returns that potentially outpace those of large-cap funds, Nifty Mid-cap funds might align with your goals. They offer the chance for higher gains, especially for those committed to long-term investing.
Investors Seeking Diversification
Investors looking to spread their investments across various sectors and companies might find value in Nifty Mid-cap funds. This diversification can mitigate risk over time while offering exposure to the growth potential of India's mid-sized companies.
Investors with Market Insights
Those who actively follow market trends and have insights into mid-cap companies might find these funds rewarding. Active engagement allows investors to make informed decisions, potentially capitalising on market opportunities.
Investors with a Market Bullish Outlook
If you have a positive outlook on the market's future, especially for mid-cap stocks, these funds could be a good fit. They tend to excel during economic upturns, making them attractive for those with a bullish market perspective.

Points to Consider Before Investing in Nifty Midcap Index Funds

There are a few things that you must consider before you put your money in a Nifty mid-cap index fund. Below are the points mentioned in detail:

Understand Market Volatility
Nifty mid-cap index funds can experience significant price swings, more so than large-cap funds. Before investing, ensure you're comfortable with this level of volatility. These funds are suitable for those who can stay invested through the market's ups and downs without reacting hastily to short-term fluctuations.
Assess Your Investment Horizon
These funds are best suited for long-term investors. The longer you stay invested, the more likely you are to withstand price fluctuations and achieve potential returns.
Evaluate Your Risk Tolerance
Given their higher volatility, Nifty mid-cap index funds require a higher risk tolerance. They can offer substantial returns but come with the risk of significant drops. Your investment in these funds should align with your overall risk appetite and financial goals.

Limitations of Investing in Nifty Midcap Index Funds

Investing in Nifty Midcap index funds has certain limitations which you must know before investing in these funds:

More Volatile
Nifty Midcap index funds are more volatile in comparison to large-cap mutual funds. These funds can fluctuate significantly depending on the market conditions. Hence, you must invest in these funds for the long term to reduce the volatility.
High Risks
Since these funds invest in mid-cap companies, which are less established than large-cap companies, it exposes them to changes in market conditions, interest rate fluctuations, etc. In addition, it exposes them to risks arising due to market competition and inflation.
No Direct Control
Since the fund managers do not directly participate in the buying and selling of funds, they lack direct control. It may affect new investors with a limited understanding of financial markets.

How to Start Investing in Nifty Midcap Funds Through INDmoney?

Ready to invest in Nifty Mid Cap Index Funds through INDmoney? Here's a simple guide to get you started:

Step 1
Download the INDmoney app and create your free investment account by completing your (KYC) (Know Your Customer).
Step 2
Once your Free investment account is ready, search for 'Nifty mid cap index fund.'
Step 3
Choose a Nifty mid cap fund by looking at its past returns, volatility, AUM, expense ratios, and underlying stocks and sectors.
Step 4
Set up an SIP in Nifty mid cap funds or invest in lump sum to start investing.
Step 5
Specify the amount you wish to invest.
Step 6
Finally, decide your payment method. For SIPs, set up an auto-debit with your bank or UPI. For lump sum, you can use UPI, net banking, or other bank transfer methods like NEFT or RTGS.

Frequently Asked Questions

The following are the three types of Nifty Midcap Indexes:

Nifty Midcap 50 Index
Nifty Midcap 100 Index
Nifty Midcap 150 Index

Yes, the Nifty Midcap index fund is a high-risk investment option than large-cap funds. These funds invest in mid-size companies that have the potential to become market leaders. However, investing in funds for the long term reduces the risk level significantly.

Yes, Nifty Midcap index funds are good for long-term investment as the mid-size companies have high growth potential.

The Nifty Midcap index funds typically offer annualised returns as high as 48%. However, you must compare the return rate of various funds before investing.

The following are some of the top-performing Nifty Midcap index funds in India:

Motilal Oswal Nifty Midcap 150 Index Fund Direct Growth
Aditya Birla Sun Life Nifty Midcap 150 Index Fund Direct Growth
Nippon India Nifty Midcap 150 Index Fund Direct Growth
SBI Nifty Midcap 150 Index Fund Direct Growth
ICICI Prudential Nifty Midcap 150 Index Fund Direct Growth

These index funds usually prioritise investing in sectors that focus on domestic growth. It enables investors to take advantage of India’s growing economy without depending much on the global market.

The returns of index funds are subject to tracking errors, which refer to deviations between the fund’s performance and the benchmark index’s performance. However, the best Nifty Midcap index funds have a low tracking error, allowing you to track the funds before investing.