Reality of Midcap Mutual Funds: Udayan Adhye

If you invest your money in MidCap Mutual Funds, Udayan Adhye, a finance content creator, shared a reel that explains what happens when you invest your money in MidCap Mutual Funds. In his recent reel, he showcases how midcap mutual funds have behaved over the past few years.

Performance Overview:

Udayan Adhye highlights the Quant Midcap Fund as the best-performing midcap mutual fund in India over the last 10 years for a SIP. A monthly SIP of Rs 10,000 in this fund would have grown to Rs. 7.4 lakhs in 5 years and Rs 48.3 lakhs in 10 years! The second-best performing mutual fund was from Motilal Oswal, and a SIP of Rs 10,000 per month would have turned into Rs 7.5 lakh in 5 years and Rs 40.7 lakh in 10 years.

Volatility and Fluctuations:

Despite their good returns, midcap mutual funds are still volatile. Adhye explains this with examples of significant drops in midcap fund values, like, in a month in Feb 2020, Quant's midcap fund fell by 33% while Motilal Oswal's midcap fund fell by 37%! In fact, from 2013 to 2023, midcap stocks have fallen by at least 10% in 1 year in 7 out of 10 years! And despite all this, a SIP in the midcap index would have grown at an XIRR of over 20%, which means a Rs 10,000 SIP would have grown to about Rs 35 lakhs over 10 years!

Understanding Midcap Mutual Funds Nature:

Udayan Adhye emphasizes that mid-cap stocks are more volatile than large-cap stocks. While midcaps offer the potential for higher returns, investors should be prepared for price fluctuations if they are investing in midcaps because that is the nature of midcap stocks.

Diversification is key:

Udayan Adhye focuses on the importance of diversification and explains why we should invest our money in large caps and not just mid-cap funds. If we want to create a well-balanced portfolio, then we will have to invest in both of these caps.

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In conclusion, Udayan Adhye shares his insightful guidance on why you should invest your money not only in midcaps but also in large caps, and what things do you have to keep in mind while investing your money in these caps. By understanding the risks and rewards associated with midcap investing, investors can navigate the market more effectively.