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    Best mid cap mutual funds to invest in 2020

    Synopsis

    We have updates on the performance of HDFC Mid-Cap Opportunities Fund and L&T Mid Cap Fund. HDFC Mid-Cap Opportunities Fund, as per our methodology, has been in the third quartile for the last nine months.

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    Here is our monthly update on the mid cap mutual fund recommendation list for October. There are no changes in the list. However, we would like to update on the the performance of one of the recommended scheme on the list: HDFC Mid-Cap Opportunities Fund. As per our methodology, the scheme has been in the third quartile for the last nine months. L&T Midcap Fund, another scheme in the recommendation list, has also been on the third quartile in the last two months.

    We are closely watching the performance of these schemes and will update you about it every month. If you have investments in these schemes, you should keep a track of our monthly updates. We usually update the recommendations in the first two weeks of every month. New investors can avoid investing in HDFC Mid-Cap Opportunities Fund.

    If you are new to these recommendations, here are a few things you should understand before considering to invest in mid cap mutual funds to meet your long-term financial goals. Mid cap mutual funds invest mostly in mid cap stocks or stocks of mid-sized companies. These companies could become a successful large company. If that happens, you will make a lot of money.

    Things You should consider
    • Annualized Return
      for 3 year: 5.1%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 2.4 Years
    Axis Midcap Fund-Growth ★★★★★
    Things You should consider
    • Annualized Return
      for 3 year: 10.41%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 2.6 Years
    However, many mid-sized companies never fulfill their promise. In fact, many of them get into trouble because of dubious management and lack of vision. This is the risk you are taking while investing in mid cap stocks. When the company hits a rough patch, the stock tanks and it may take a very long time to bounce back or it may never regain its glory. When a company faces these phases, its stocks may suffer badly.

    If you are a new mutual fund investor, you should avoid investing in mid cap schemes. Start with relatively safer large cap mutual funds, gain some experience and confidence before venturing into the mid cap space. But do it only if you have the necessary risk appetite. Otherwise, sacrifice those extra returns and be happy with moderate returns from relatively less risky equity schemes like large cap mutual funds and multi cap mutual funds.

    Best large cap mutual funds to invest in 2020

    Best multi cap mutual funds to invest in 2020

    Finally, if you have a very high risk appetite and can invest for a long-term horizon of seven to 10 years, you can invest in mid cap mutual fund schemes. We have handpicked five mid cap equity mutual fund schemes that you may consider to invest to achieve your long-term financial goals.

    Best mid cap mutual fund schemes to invest in 2020
    Here is our methodology:
    ETMutualFunds.com has employed the following parameters for shortlisting the equity mutual fund schemes.

    1. Mean rolling returns: Rolled daily for the last three years.

    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H is less than 0.5, the series is said to be mean reverting.
    iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X =Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z

    4. Outperformance: It is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.
    Average returns generated by the MF Scheme =
    [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}

    5. Asset size: For Equity funds, the threshold asset size is Rs 50 crore

    (Disclaimer: past performance is no guarantee for future performance.)


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    2 Comments on this Story

    Shashx Singham20 days ago
    Video on Multi Cap Fund category equity mutual fund presents an easy way to deal with your anxiety t decide with category to select from 10 variety of Equity Mutual Fund. Many MF misled investors and SEBI action may bring sanity to investment in multi cap category. To know detailed analysis,
    https://youtu.be/13eI_asWNSI may please watch this video and subscribe this channel for latest updates
    Suman Sah289 days ago
    L&T mid cap fund has a change in it's fund manager and CIO... will it still be a good fund to hold and even do more allocation???
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