An In-Depth Review of Tata Mid Cap Fund: A Smart Addition to Your Portfolio

Mid-cap funds have delivered impressive returns over the last 10-15 years. Notably, the Nifty Midcap index has generated analyzed returns of 20% in the past decade, which can be deemed quite substantial.

Understanding Mid-Cap Funds

Mid-cap funds primarily invest in mid-sized companies, balancing risk more effectively than large-cap and small-cap funds. For long-term wealth generation through mutual funds, incorporating a mid-cap fund into your portfolio can be a wise choice.

A Closer Look at Tata Mid Cap Fund

In this article, we will conduct a comprehensive review of the Tata Mid Cap Fund, analyzing its potential for investment and the strategies for current investors.

Fund Basics

Launched on July 1, 1994, the Tata Mid Cap Fund is a well-established option. It benchmarks itself against the 150 TR I of Nifty Mid. With a latest AUM (Assets Under Management) of ₹4514 crores, liquidity is not a concern. The expense ratio for the direct plan is 73, aligning closely with the category average of 72. The fund’s turnover ratio stands at 35.3%, indicating a stable portfolio with moderate changes by the fund manager.

Fund Management

Managed by Mr. Satish Chandra Mishra since 2021, the fund’s performance will be analyzed next.

Historical Returns

If a monthly SIP of ₹5000 had been started 10 years ago, the total investment today would be ₹6 lakh, with a maturity value of ₹25,00,000. Conversely, a ₹1 lakh investment from a decade ago would now yield only ₹1,99,000, while the category average is ₹11,55,000. This indicates that, over the long term, this mid-cap fund has slightly outperformed the category average.

Rolling Returns

The fund’s rolling returns over the last 10 years are 20.13%, slightly trailing its benchmark. The returns over the last 5 years are 21.22% against a benchmark of 31.9%, and in the last 3 years, the fund achieved 25.9% compared to 26.57% from the benchmark. While these returns are commendable, the fund has struggled to outperform even its category average in the last five years.

Risk Analysis

Examining the risk ratios, the fund has an alpha of 48, better than the category average of 42. This indicates that the fund generates higher returns compared to its benchmark. The fund’s beta stands at 87, suggesting it is less volatile than the category average (91).

The Sharpe ratio of the fund is 1.35, compared to the category average of 1.32, indicating good risk-adjusted returns. Its standard deviation is 13.35, lower than the category average of 14.20, further confirming its stability.

Portfolio Composition

The fund’s portfolio comprises 64 stocks, with the top 10 accounting for 27.6%, demonstrating good diversification. The PB ratio is 4.30, and the PE ratio is 29.64, suggesting the fund is trading at a reasonable valuation.

In terms of asset allocation, the fund invests 9.36% in large-cap companies, 69.37% in mid-cap companies, and 21.27% in small-cap companies, aligning with category norms. The sector-wise allocation shows the highest exposure in Financial Services, Capital Goods, and Automobile, indicating robust industry positioning.

Rating and Personal Opinion

The fund has received a three-star rating from both Value Research and Crisil. It’s essential to note that the insights shared here are personal opinions and not financial advice. Always conduct your own research or consult a financial advisor before investing.

Conclusion

The long-term returns of the Tata Mid Cap Fund have been commendable, with a 10-year return of 20.13%. In comparison, the top fund in this category, the Motilal Oswal Midcap Fund, has yielded 23.1% over the same period. While the Tata Mid Cap Fund hasn’t performed poorly, it raises concerns when it fails to beat its benchmark consistently over a decade.

For current investors content with the fund’s performance, maintaining their investment might be advisable. Those considering new investments should also look at other top-performing mid-cap funds discussed in this article.

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