Fund of Fortnight

This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. 

Tata Mid Cap Growth Fund - Direct Plan (Growth)

Reason for recommendation 

The frontline Indian equity indices are again at a kissing distance from their all-time high. The last time, when they touched new highs after general election results, broader market indices, such as midcap, did not join the rally. However, this time they are moving along with largecap indices. In fact, midcap indices have performed the best among all the market cap indices in last one month, which indicates that midcaps are finally inclined to gain after a huge underperformance in the last one and half years. 

Against this background, investing in a midcap fund makes a perfect sense. The Tata midcap growth fund is one such midcap dedicated fund, which is just the perfect candidate for investment. It has invested 75.21% of its corpus in midcap stocks, 13.45% in smallcaps, and the rest in the largecap stocks. The good part of the fund is that it has outperformed its benchmark in falling market (2018 and 2011) and rising market (2014 and 2017), both. As of now, the fund is sitting on a return of 6.24% YTD, when the benchmarks (S&P, BSE, Midcap, and TRI) are giving negative returns. 

Going forward, Tata midcap fund is well poised to beat its benchmark with its well diversified portfolio. As of September 30, 2019, the fund holds 41 stocks, wherein, the top 10 stocks hold less than 50% of the corpus. Moreover, the fund is overweight on the retail, FMCG and the chemical sectors, which are likely to perform better in the near future. Hence, this fund is well suited for a risk taking investor with investment horizon of more than one year.