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Securities Exchange Board of India categorizes companies in terms of market capitalization. The ones that are not in top 250 are termed as Small caps and the ones ranked from 101 to 250 are termed as Mid-cap.
Below are the advantages of investing in Mid-cap:
i. Higher Returns: These funds work the best when the economy is in the revival mode. Experts say that at times they also beat large-cap in terms of the returns offered. The only risk is that they are unpredictable than large-cap funds, which offer greater stability.
ii. Growth Potential: Mid-cap companies are considerably larger than small-caps. As a result these stocks offer the potential for growth. Good mid-cap Mutual Funds identify stocks that can deliver strong earnings and provide superior returns.
iii. Good Value: Mid-cap usually trade at discounts to their large-cap peers and offer scope for value to be unlocked. The only thing we need to remember is that they are very volatile in the short term and you must have a long term horizon to allow these funds to play to their potential.
iv. Diversification: Mid-cap funds not only offer you a way to diversify your portfolio in terms of market capitalization but also let you invest in a breadth of sectors. Mid-cap companies cover a broader range of industries than large cap.
Now that you know the advantages of investing in mid-cap you may decide if you want to invest in it or not. If you plan to start investing in Mutual Funds I would recommend HDFC securities. Here is the link for the same: https://www.hdfcsec.com/digify/login?id=lgn