In contrast to biological life cycle, companies do go through periods of growth and saturation. Mid cap companies capture a period in the typical business life cycle, wherein companies have successfully navigated the phase inherent to small companies, such as raising initial capital, managing early growth challenges; however, these companies are likely to sustain leadership, operate with significant moat, and they are not so large that their ability to grow fast is disparaging. Therefore, mid-cap companies can offer a sweet spot between fast-growing small businesses and well-established large companies.
Midcap stocks fall between large cap and small cap stocks and are determined by market capitalization. A midcap fund invests 65% of its corpus in equity and equity related instruments of midcap companies. Midcap funds provide investors with an opportunity to benefit from the growth stories of medium sized businesses, but investors should be aware of their inherent risks. UTI Mid Cap Fund is an open ended equity scheme investing in mid cap companies with scalable business models and a long growth runway. It pursues a bottom-up stock selection approach to pick businesses with healthy financials and potential for sustenance of margins.
It has a well-diversified portfolio with 78 stocks covering various sectors and industries. The UTI Mid Cap Fund was established on April 7, 2004 and has an AUM of over Rs. 7,729 crores with over 4.77 lakhs of unit holder accounts as of May 31, 2023. The top holdings consist of Cholamandalam Investment and Finance Co. Ltd., Federal Bank Ltd., Astral Ltd., Tube Investments of India Ltd., PI Industries Ltd., Shriram Finance Co. Ltd., Coforge Ltd., Polycab India Ltd., J K Cement Ltd., and Bharat Forge Ltd. The fund aims to strike a balance between risk and reward by investing in companies with a strong ROCE and Cash flow profile. It is suitable for investors looking for an investment in a portfolio predominantly investing in mid cap companies and willing to supplement their core equity portfolio with its growth potential.
