For those looking to invest in the mid-cap segment of the stock market, taking exposure through an index fund can be a good starting point.
While the mid-cap stocks hold the potential to turn into the large-cap stocks of the future, the risk-reward ratio of mid-caps, including the volatility, when compared to large-cap stocks is considered to be high in them.
Therefore, taking exposure in mid-cap shares through an index fund could be a better alternative for those looking for returns in line with the market performance. Index funds closely track an index representing a market segment, style or asset class and are low-cost passive funds without the role of a fund manager.
ICICI Prudential Mutual Fund has recently launched ICICI Prudential Midcap 150 Index Fund that aims to provide returns that closely correspond to the total return of Nifty Midcap 150 index. The NFO closes on December 17, 2021, while the minimum investment required is Rs. 100.
Nifty Midcap 150 Index
The top 100 Companies in terms of Market cap form the Large cap index while the next 150 companies form the mid caps. Nifty Midcap 150 Index Represents the next 150 companies (ranked 101-250) based on full market capitalisation from Nifty 500 Index.
These top 150 companies in terms of market cap after the Large cap companies form the Mid cap index. By investing in ICICI Prudential Midcap 150 Index Fund, you take an exposure into these 150 companies listed on the stock exchange.
Nifty Midcap Index has consistently outperformed Nifty 50 TRI and Nifty Smallcap 250 TRI over the last 10 years (Data as on 24 Nov, 2021, Source MFIE). The index has provided better returns than the the Nifty 50 index 7 of the last 10 calendar years (Data as on 24 Nov, 2021, Source MFIE).
Top 10 Index Companies
Adani Total Gas Ltd 2.27%
Tata Power Co. Ltd 2.08%
SRF Ltd. 1.76%
Shriram Transport Finance Co. Ltd 1.66%
Mindtree Ltd. 1.65%
Voltas Ltd 1.60%
Zee Entertainment Enterprises Ltd 1.59%
Crompton Greaves Consumer Electrical Ltd. 1.58%
Mphasis Ltd. 1.53%
AU Small Finance Bank Ltd 1.53%
Top 10 Sector Constituents
Financial Services 17.74 (%)
Consumer Goods 11.11 (%)
Industrial Manufacturing 9.59 (%)
Automobile 8.64 (%)
IT 7.85 (%)
Chemicals 7.33 (%)
Pharma 6.59 (%)
Oil & Gas 5.54 (%)
Power 3.84 (%)
Consumer Services 3.38 (%)
Who should invest
ICICI Prudential Midcap 150 Index Fund provides exposure to midcap segment of market, as the Scheme will invest in well diversified Nifty Midcap 150 index constituents spread across key industries. Historically, Midcap index outperforms Large cap indices during greater economic activity.
By investing in ICICI Prudential Midcap 150 Index Fund, you end up taking a diversified exposure in different sectors and mid-cap companies in a single investment. Based on your risk profile and after discussing with your financial advisor, you may consider investing in the fund with a long term view.