Best Midcap Mutual Fund ?? HDFC Midcap Opportunities Fund vs Kotak vs Motilal Oswal Midcap Fund

Summary

This script discusses midcap mutual funds as a potential investment for 5+ years, highlighting their 'sweet spot' between high-risk small caps and large caps. It advises a reasonable return expectation of 12-15% and warns against selecting funds based on recent high returns. The speaker proposes a methodical comparison of 29 midcap funds based on returns, risk analysis, and investment strategy, emphasizing the importance of long-term performance and downside protection. The video concludes with a suggestion to consider Nifty midcap 150 index funds for稳健投资.

Takeaways

• 😀 Midcap mutual funds are a good investment category for those planning to invest for at least 5 years, offering a balance between risk and reward.
• 📈 Historically, consistent Systematic Investment Plans (SIPs) in midcap mutual funds have yielded an average return of 20-23%, but a reasonable expectation should be around 12-15%.
• 🚫 Selecting mutual funds based solely on last year's returns is not advisable, as past performance does not guarantee future results.
• 📉 It's prudent to allocate no more than 10-15% of a conservative investor's portfolio to midcap funds to limit risk.
• 📊 Risk analysis is crucial, examining how funds perform during market downturns to gauge their resilience.
• 💼 Aggressive investors might allocate up to 35% in midcap and 25-30% in small-cap funds, given their higher risk tolerance.
• 📋 The video emphasizes the importance of analyzing funds' long-term performance, consistency, and adherence to investment strategies.
• 💡 Investors are advised to maintain a cash position and consider investing in fixed deposits for safety and higher returns during market uncertainty.
• 📈 The script highlights that funds like Kotak Emerging Equity and HDFC Midcap Opportunities have shown good downside protection but may not have the highest returns.
• 🔍 Fund managers' tenure and consistency are significant, with some funds having managers since inception, which could indicate stability and experience.
• 📚 The video is for educational purposes only, urging viewers to conduct their own research before making investment decisions.

Q & A

What is the primary benefit of investing in midcap mutual funds for at least 5 years?

Midcap mutual funds are considered to be in a 'sweet spot' between small caps, which are riskier, and large caps, which may not offer as high returns. They can act as growth drivers for a portfolio with reasonable risk and potentially higher returns over the long term.

What kind of returns can investors expect from midcap mutual funds based on past data?

Historically, consistent SIPs in midcap mutual funds have provided returns of 20-23% in the last 10 years, but this is past data, and future returns may vary. A more reasonable expectation for the future would be around 12-15% returns.

Why is it not advisable to select midcap mutual funds solely based on the previous year's performance?

Past performance does not guarantee future results. Funds that performed exceptionally well in one year can become poor performers in subsequent years, as shown in the example where the top fund in 2018-2020 ranked 190th in 2021-2023.

What criteria should be used to evaluate midcap mutual funds for long-term investment?

Midcap mutual funds should be evaluated based on return consistency (funds that outperform their benchmark over time), risk analysis (how they perform in down markets), and investment strategy (the fund's style and approach).

How much portfolio allocation is recommended for midcap mutual funds based on investor risk profiles?

For a conservative investor, no more than 10-15% should be allocated to midcaps. A moderate-risk investor can allocate 20-25%, while an aggressive investor can allocate 30-35% to midcaps, with smaller allocations in small caps depending on risk tolerance.

Why might investing in a Nifty midcap 150 index fund be a good alternative to active midcap mutual funds?

Nifty midcap 150 index funds typically have lower expense ratios, lower risk, and are easier to track. In some cases, active midcap mutual funds may struggle to outperform the benchmark, making index funds a potentially better choice for consistent returns.

Which parameters are important to consider when selecting a Nifty midcap 150 index fund?

When selecting a Nifty midcap 150 index fund, investors should look for high AUM (Assets Under Management), a low expense ratio, a low exit load, and a low tracking error.

What is the downside capture ratio, and why is it important?

The downside capture ratio measures how much a fund declines compared to its benchmark during down markets. A lower downside capture ratio indicates better performance in protecting against losses. For example, the Motilal Oswal Midcap Fund had a downside capture ratio of 70%, meaning it fell 30% less than the benchmark.

What is the significance of turnover ratio in mutual funds?

The turnover ratio indicates how frequently a mutual fund buys and sells its holdings. A high turnover ratio, such as 167% for the Motilal Oswal Midcap Fund, suggests the fund is actively managed with frequent portfolio changes. Low turnover ratios imply a more 'buy and hold' strategy.

Why is the experience of a fund manager important when selecting a midcap mutual fund?

The experience and consistency of a fund manager can have a significant impact on the fund's performance. Funds like Quant and HDFC Midcap Opportunities still have the same fund managers since inception, which provides confidence in their ability to generate high alpha, as they have in the past.