Mid Cap Fund — What It Is, Who Should Invest & Best Funds
SEBI definition: Invests at least 65% in companies ranked 101st to 250th by market capitalisation.
Who should invest
Aggressive investors with a 7–10 year horizon who can stomach significant short-term drawdowns (40–50% in bear markets) in exchange for higher long-term returns.
| Risk level | High |
| Suggested horizon | 7–10 years |
| Historical returns | 14–18% CAGR historically over 10 years |
| Taxation | Equity taxation: LTCG at 12.5% after ₹1.25L exemption; STCG at 20%. |
Advantages
- Higher return potential than large cap over 7-10 years
- Captures companies growing into large caps
- Many of India's best businesses are mid caps today
Drawbacks
- High volatility — can fall 40-50% in bear markets
- Lower liquidity than large cap funds
- Requires strong long-term conviction
Frequently asked questions
Can I start a SIP in a mid cap fund?
Yes, and SIP is actually the best way to invest in mid cap funds because it averages your cost across market cycles. Avoid lump sum at market peaks — the drawdowns can be severe.
Which is better — mid cap or flexi cap?
A flexi cap fund gives the manager flexibility across market caps, so it can reduce mid cap exposure in downturns. A pure mid cap fund has at least 65% always in mid caps regardless of market conditions. Flexi cap is safer; mid cap has higher return potential.
Related categories
See the best Mid Cap Funds ranked by data, or filter every scheme in the fund screener. Historical returns describe the past only — mutual fund investments are subject to market risks.