Why Mid Cap Mutual Funds Are An Ideal Long Term Investment

Mid Cap mutual funds are funds which are made up of investments in companies with a medium market capitalization. Any company with a market capitalization of over $10 billion is regarded as being large cap, while those with a market capitalization of under $2 billion are known as small cap. The middle range of companies between those limits is where the mid cap mutual fund industry operates. The idea is to avoid the risk inherent with smaller companies, while at the same time preserving more growth potential than the largest companies offer.

The advantages this can offer the investor are simple enough to understand. If you want to invest in the shares of medium to large companies, you will need a reasonably large investment. To invest in several different companies, as you will need to do to protect your investment, will obviously take even more. The only way it is possible for the smaller investor to achieve this is by pooling resources with other investors, through the medium of the mutual fund. You are no longer limited to investing in smaller, riskier, companies as you would otherwise have been.

The negative side of mutual funds, that you cannot select your own investments, would not really apply in that case, as you would have been prevented by size considerations of doing so anyway. The one disadvantage which may be a problem with mid cap funds is a potential distrust of the fund manager. If you read the financial press and study the market, you may well have your own opinions as to which companies the fund manager should be investing in. You will need to be able to trust the fund manager with his choices, otherwise the investment will never work for you.

This type of mutual fund does allow for plenty of diversification between market sectors, as there are many companies in this medium range. The possibility of a severe loss of money is a remote one, as even in a market crash many companies will survive, and come back to their former price level relatively quickly. The combination of diversity and the solidity of many of these companies makes this type of fund ideal for those looking to protect their retirement income.

Investing in mid cap mutual funds is one way of taking advantage of the incentives offered by the Federal Government to invest and save for retirement. There are tax shelter investments which are possible if you pay a regular contribution, and do not remove any of the money before your retirement age. The money you invest can be withdrawn in an emergency situation, but if this happens it will no longer be protected from taxation in the same way. There are few better ways to prepare for retirement than with mid cap mutual funds.

 

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No Load Mutual Funds News:

 

At least 1.66 mn SIP accounts closed in 2011 - Livemint

At least 1.66 mn SIP accounts closed in 2011
Livemint
India's `6.81 trillion mutual fund industry is losing its most trusted source of equity inflowsEURsystematic investment plans (SIPs). The latest data from registrar firms Computer Age Management Services Pvt. Ltd (CAMS) and Karvy Computershare Pvt. Ltd .

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Poor returns hit MF investments through SIPs - Business Standard

Poor returns hit MF investments through SIPs
Business Standard
Investment in equity mutual funds through systematic investment plans (SIPs), once a steady route of sticky money inflows to the fund industry, is now being hit. Volatile market conditions and poor visibility of expected returns are making investors .

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More MF investors head for exit door - Business Standard

More MF investors head for exit door
Business Standard
Bear markets or bull markets, it's an unchanged down story for the Indian mutual fund industry on equity investors' base. The steep rally in the stock markets since January 1 has only intensified exodus of retail investors from MFs.

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SIPs lose shine, 1.6 m accounts closed in 2011 - Deccan Herald

India Today
SIPs lose shine, 1.6 m accounts closed in 2011
Deccan Herald
Though financial experts advise retail investors to stick to systematic investment plans (SIPs) in a fluctuating market to maximise gains, the domestic mutual fund industry with assets of over Rs 6.81 trillion is losing its grip over its most trusted .
Mass exit by small investorsIndia Today

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Lost faith in your SIP? Don't give up - Hindustan Times

Lost faith in your SIP? Don't give up
Hindustan Times
Data from Computer Age Management Services (CAMS), a registrar and transfer agent to a number of mutual funds, shows that spooked investors are voting with their money and the number of ceased SIPs has almost doubled over the calender year 2011.

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SIPs in mutual fund and how to best utilise them - mydigitalfc.com

SIPs in mutual fund and how to best utilise them
mydigitalfc.com
By Arnav Pandya Feb 02 2012 There are different ways in which a systematic investment plan (SIP) can be implemented. However, the investors are often in a confused state due to the different methods used by various fund houses for processing SIP.

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Entry load or not, most foreign funds got it wrong
EURWhen a fund house like Fidelity exits, it does not augur well for the Indian mutual fund industry,EUR says the chief executive officer of a leading fund house. But, he is quick to add, exits of large and well-known foreign fund houses from India are common...


 

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