Mutual fund investment: In the present day, individuals are actively seeking opportunities to invest and increase their savings. While some are venturing into the stock market, others are exploring the realm of cryptocurrencies. However, mutual funds have become a favored investment choice for many, as they provide a well-rounded approach to wealth accumulation without the intricacies of managing individual stocks.

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The mutual fund industry had a remarkable year in 2024, with equity mutual funds receiving inflows of more than Rs 3.5 lakh crore and assets under management (AUM) increasing by close to 40%. In 2024, sectoral mutual funds experienced significant growth in assets under management, with small-cap funds reaching Rs 3.26 lakh crore, mid-cap funds rising to Rs 3.89 lakh crore, and large-cap funds reaching Rs 3.62 lakh crore. Index funds and ETFs also saw a notable 28% increase during the same period.

In the past two to three years, the highest-performing mutual fund schemes have been smallcap and midcap funds, along with specific thematic funds. Experts suggest that investors predominantly rely on past performance when choosing funds through online platforms.

According to the regulations set by the Securities Exchange Board of India (Sebi), large-cap mutual funds are required to allocate a minimum of 80% of their investments in large-cap stocks. Conversely, mid-cap mutual funds must have a minimum of 65% of their investments in mid-cap stocks. However, both large and mid-cap mutual funds must allocate at least 35% of their investments in large and mid-cap stocks each. The fund manager has the flexibility to adjust the allocation of large and mid-cap stocks in the fund in response to market conditions.

Business Today spoke to Chethan Shenoy, Director & Head – Product & Research, Anand Rathi Wealth Limited on midcap recommendations for this year.

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Here are the top 3 funds in the mid-cap segment:

1. Kotak Emerging Equity Fund Regular-Growth

Kotak Emerging Equity Fund is regarded as one of the top-performing funds in the mid-cap category. The fund has completed 17 years in the mid-cap investment space. Since Atul Bhole took over as Fund Manager in January 2024, the fund has consistently delivered impressive results. Bhole brings 18 years of industry experience, including 13 years as a Fund Manager. He has previously been with TATA, ICICI and DSP AMCs where he managed funds such as DSP flexicap which successfully generated alpha during his period of his fund management.

Kotak Emerging fund has an AUM of Rs 53,000 crore. In the calendar year 2024, the fund has achieved an impressive 33.55%, the earnings growth of the fund’s underlying portfolio is around 25%. The fund has garnered approximately Rs 1,400 crore in new investments during the last quarter of 2024, making it one of the top 5 funds witnessing net flows.

2. Invesco India Mid Cap Fund Growth

Invesco India Mid Cap Fund, currently managed by Aditya Khemani since November 2023, has a legacy spanning 17 years. Khemani, a seasoned fund manager with 15 years of experience, has successfully propelled the fund’s performance since taking charge. He has previously been a part of Motilal Oswal AMC and HSBC AMC.

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The AUM of the fund is around Rs 6,000 crore. It has delivered a remarkable 43.15% return in the calendar year 2024, and it is expected that the earnings growth of the fund’s portfolio as against the mid-cap benchmark is higher by 4% in the next one year. The fund has attracted approximately ₹240 crore in additional AUM during the last quarter of 2024.

3    Motilal Oswal Midcap Fund – Growth

Motilal Oswal Midcap Fund is one the top 3 funds from mid capcatgeory, this fund has given stellar returns in the last calendar year. The fund has completed 10 years and is managed by Niket Shah. 
Shah brings 15+ years of industry experience and over 6.5 years as a Fund Manager. Almost all his funds have been alpha generators this calendar year.

The fund has an AUM of Rs 26,000 crore. In the calendar year 2024, the fund has delivered an impressive 57.13% return and it is expected that the earning growth of the fund’s portfolio will outperform the midcap benchmark by 11%. The fund has received approximately Rs 6,700 crore of new investments during the last quarter of 2024 which is the highest inflow for the category.

(Views expressed by the expert are his/her own.)