What Are Mid-Cap Mutual Funds? How to start investing in a Mid Cap Fund?

In the market, mid-cap funds as a financial product come in different forms or options. This variety is largely created depending on:

• How are they managed?

• What benchmark does the fund follow?

• What is their investment strategy?

Be aware that some mid-cap funds are actively managed, where fund managers select stocks. Whereas others are passive index funds, which can simply replicate a market index. For more clarity, check out the table below:
 

Firstly, you should pick the right scheme! The selection can be based on your risk appetite and preferred style of investing. For example:

•  If you want active stock-picking, you can consider active mid-cap funds.

• If you want market-linked growth at low cost, you can invest in mid-cap index funds.

• If you want theme-based strategies, you can opt for sectoral mid-cap mutual funds.

Now, once you have identified the right fund, follow these steps to begin and manage your investment.

Step I: What are Your Investment Objectives

Decide why you want to invest in mid-cap mutual funds. If you seek long-term growth, you can choose a “growth plan”. Whereas, if you prefer occasional payouts, you may opt for a “dividend plan” [also known as Income Distribution Cum Capital Withdrawal (IDCW) plan].

Step II: How Do You Want to Invest

You can invest a one-time lump sum amount or through a Systematic Investment Plan (SIP). For those unaware, SIP spreads your investment and allows you to buy units monthly at different price levels. This approach reduces the risk of investing at a single market peak.

Step III: Check Your Portfolio’s Performance

As an investor, you can keep track of your mid-cap fund’s performance by reviewing it at regular intervals. Through such an analysis, you can decide if you should continue, switch, or re-balance your investments.

Step IV: Regularly Re-balance Your Portfolio

Let’s say your mid-cap investments have grown significantly. Now, you can consider moving part of your gains into other asset classes like debt or large-cap funds.

Why? Through such a rotation, you can maintain the right balance/mix in your portfolio and avoid over-exposure to mid-cap risk.

Disclaimer: The above information is for educational purposes only. Please do your own research before investing.
 

In 2025, to start investing in mid-cap funds, you can consider the various schemes offered by Tata Mutual Fund. With these mid-cap investment funds, you can begin with a SIP from as low as ₹100 or make a lump sum investment starting at only ₹5,000.

Also, you can choose between a growth plan or a dividend plan based on your liquidity needs. For your reference, below is a list of mid-cap mutual funds you can invest in 2025:
 

An open ended fund replicating / tracking the Nifty Midcap 150 Index (TRI)

The Tata Nifty Midcap 150 Index Fund can give returns similar to the Nifty Midcap 150 Index (TRI), subject to minor tracking error. For those unaware, this index consists of 150 companies ranked 101st to 250th by market capitalisation from the Nifty 500 universe.

In this scheme, larger mid-cap companies can have higher weights. This composition can change when the index is rebalanced twice a year in March and September.

Furthermore, the portfolio of this index fund is diversified and can be spread across multiple sectors, such as:

• Finance

• Consumer goods

• Healthcare

• Information Technology

• Industrials

(The above product labelling assigned during NFO is based on internal assessment of the scheme characteristics and the same may vary post NFO when the actual investments are made. The same shall be updated as per provision no. 17.4.1.i of SEBI Master Circular on Mutual Fund dated June 27, 2024, on Product labelling in mutual fund schemes on ongoing basis.)

An open-ended equity scheme predominantly investing in mid-cap stocks

The Tata Midcap Fund can primarily invest in mid-cap companies with strong growth potential. Its investment philosophy can be divided into three main parts:
 

Additionally, this fund’s portfolio can be built following a “buy-and-hold” strategy with low churn. Also, more preference can be given to market leaders within their segments.

It may be noted that risk-o-meter specified above is based on internal assessment. The same shall be updated as per provision no. 17.4.1.i of SEBI Master Circular on Mutual Fund dated 27.06.2024, on Product labelling in mutual fund schemes on ongoing basis.   

An open-ended scheme replicating/tracking nifty midcap 150 momentum 50 index

The Tata Nifty Midcap 150 Momentum 50 Index Fund is a passive fund that replicates the Nifty Midcap 150 Momentum 50 Index. For those unaware, this index selects 50 stocks from the Nifty Midcap 150 universe. The selection is based on their “momentum score”, which measures how strongly a stock has performed in the past.

Source: Nifty Indices  - Nifty Midcap 150

It may be noted that risk-o-meter specified above is based on internal assessment. The same shall be updated as per provision no. 17.4.1.i of SEBI Master Circular on Mutual Fund dated 27.06.2024, on Product labelling in mutual fund schemes on ongoing basis. 

An open-ended equity scheme investing in both Large Cap and Mid Cap Stocks

The Tata Large and Mid Cap Fund is an actively managed equity scheme that invests in both large-cap and mid-cap companies. The portfolio usually consists of 25 to 35 stocks, which are held for the medium to long term.

The fund managers can follow an investment approach where they look at “turnaround stories” and prefer companies being re-rated by the market. Also, they can focus on companies with:

• Consistent performance

• Low debt

• Strong cash flows

• Potential for earnings growth beyond market expectations.

Furthermore, the fund can follow a Growth at Reasonable Price (GARP) strategy, where stock selection is based on individual merit rather than strict benchmark weights. This scheme can also take positions outside the benchmark when strong opportunities are identified.

It may be noted that risk-o-meter specified above is based on internal assessment. The same shall be updated as per provision no. 17.4.1.i of SEBI Master Circular on Mutual Fund dated 27.06.2024, on Product labelling in mutual fund schemes on ongoing basis.

Mid-cap funds are equity mutual funds that invest in medium-sized companies, ranked 101st to 250th by market capitalisation. They can carry a higher risk than large-cap funds, but can also offer more chances of a stronger long-term growth.

Before investing, it is important to assess your risk appetite and then choose schemes that match your financial plans. If you are searching for options, Tata Mutual Fund offers a range of mid-cap investment funds. Some schemes you can consider in 2025 are:

• Tata Mid Cap Fund

• Tata Nifty Midcap 150 Index Fun

• Tata Nifty Midcap 150 Momentum 50 Index Fund

• Tata Large and Mid-Cap Fund

Source: For all categorization of mutual fund schemes related disclosures point 2.6 and 2.7 of Master Circular dated June 27, 2024.

The views mentioned above are for information & educational purposes only and do not construe to be any investment, legal or taxation advice. Investors must do their own research before investing. The views expressed in this article are personal in nature and in is no way trying to predict the markets or to time them. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management Pvt. Ltd. will not be liable in any manner for the consequences of such action taken by you. Please consult your Mutual Fund Distributor before investing. The views expressed in this article may not reflect in the scheme portfolios of Tata Mutual Fund. There are no guaranteed or assured returns under any of the scheme of Tata mutual Fund.