Mid-cap investing intends to capture companies with growth potential and evolving business models that carry moderate risk. Compared to both large caps and small caps, the average earnings of midcaps grow faster, with less volatility and risk. The mid-cap space seeks to invest in emerging future market leaders.

Despite the fact that mid-cap companies can provide higher returns, they are riskier than large-cap funds. Investing in the mid-cap segment through passive funds is a suitable alternative for investors who can stomach the high-risk and are seeking a low-cost passive option for their mid-cap portfolio.

If you are looking for long-term growth opportunities in the mid-cap segment, along with inflation-beating returns over time, you could consider investing in the Nifty Midcap 150 index. This index covers the entire mid-cap market segment and is well-diversified across several sectors.

Mirae Asset Mutual Fund has launched Mirae Asset Nifty Midcap 150 ETF. It is an open-ended scheme replicating/tracking the Nifty Midcap 150 Total Return Index.

On the launch of this fund, Mr Swarup Mohanty, Director & CEO at Mirae Asset Investment Managers (India) Pvt. Ltd., said, “The Midcap segment is a group of emerging companies in Indian industry. We at Mirae Asset Mutual Fund are constantly working towards providing cost-effective products like these to our partners & investors, which can help them enhance their portfolio in this Midcap ETF space.”

Table 1: Details of Mirae Asset Nifty Midcap 150 ETF

Type An open-ended scheme replicating/tracking Nifty Midcap 150 Total Return Index Category Exchange-Traded Fund
Investment Objective The investment objective of the scheme is to generate returns before expenses that are commensurate with the performance of the Nifty Midcap 150 Total Return Index, subject to tracking error. The Scheme does not guarantee or assure any returns.
Min. Investment Rs 5,000/- and in multiples of Re 1 thereafter. Additional purchase Rs 1,000/- and in multiples of Re 1 thereafter. Face Value Rs 10/- per unit
Entry Load Not Applicable Exit Load Nil
Fund Manager Ms Ekta Gala Benchmark Index Nifty Midcap 150 Index TRI (Total Return Index)
Issue Opens: February 24, 2022 Issue Closes: March 04, 2022

(Source: Scheme Information Document

The investment strategy for Mirae Asset Nifty Midcap 150 ETF will be as follows:

The Mirae Asset Nifty Midcap 150 ETF will be managed passively with investments in stocks in the same proportion as in the Nifty Midcap 150 Index. The scheme will aim to generate returns equivalent to the underlying index.

The scheme will endeavour to invest in a basket of securities forming part of the Nifty Midcap 150 Index in a similar weight proportion. The scheme’s performance may not be commensurate with the performance of the respective benchmark of the scheme on any given day or over any given period. Such variations are commonly referred to as tracking errors.

The investment strategy would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, considering the change in weights of stocks in the Index as well as the incremental collections/redemptions in the scheme. However, there is no assurance that all such buying and selling activities would necessarily result in benefit for the Fund.

A small portion of the fund may be invested in debt and money market instruments to meet the liquidity requirements. Subject to the Regulations and the applicable guidelines, the scheme may invest in other Mutual Fund schemes. The investment strategy shall be in line with the Asset Allocation as defined for the scheme.

Under normal circumstances, the Asset Allocation will be as under:

Table 2: Asset Allocation for Mirae Asset Nifty Midcap 150 ETF

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Securities included in the Nifty Midcap 150 Index 95 100 High
Money market instruments, including Tri-Party REPO/ debt securities, Instruments, and/or units of debt/liquid schemes of domestic Mutual Funds 0 5 Low to Medium

(Source: Scheme Information Document

About the benchmark

The NIFTY Midcap 150 represents the next 150 companies (companies ranked 101-250) based on full market capitalisation from the NIFTY 500. This index intends to measure the performance of mid-market capitalisation companies.

The NIFTY Midcap 150 Index is computed using the free-float market capitalization method, wherein the level of the index reflects the total free-float market value of all the stocks in the index relative to a particular base market capitalization value.

Here’s the list of top constituents by weightage and sector representation under the index, as of January 31, 2022:


(Source: NIFTY Midcap 150 Index Factsheet)

Note that the index review is undertaken semi-annually based on data for six months.

Who will manage Mirae Asset Nifty Midcap 150 ETF?

The designated fund manager for this scheme is Ms Ekta Gala. She has completed Inter CA (IPCC), holds a Bachelor of Commerce (B. Com) degree, and has professional experience of more than 4 years. Her primary responsibility includes Dealer & Fund Management. She was previously associated with ICICI Prudential AMC as ETF Dealer.

At Mirae Asset Mutual Fund, Ms. Gala currently manages Mirae Asset NIFTY 50 ETFMirae Asset NIFTY Next 50 ETFMirae Asset ESG Sector Leader ETFMirae Asset ESG Sector Leader Fund of FundMirae Asset NYSE FANG+ ETF Fund of FundMirae Asset Nifty Financial Services ETFMirae Asset HangSeng TECH ETF Fund of FundMirae Asset Nifty India Manufacturing ETFMirae Asset Nifty India Manufacturing ETF Fund of Fund and Mirae Asset S&P 500 Top 50 ETF Fund of Fund

Fund Outlook – Mirae Asset Nifty Midcap 150 ETF

Mirae Asset Nifty Midcap 150 ETF aims to mirror the performance of the Nifty Midcap 150 Index, which captures the movement of the mid-cap segment of the market. The scheme endeavours to invest in securities in similar proportion as the underlying index to generate parallel returns, subject to tracking errors.

Mirae Asset Nifty Midcap 150 ETF offers investors an opportunity to participate in the entire mid-cap segment of the market by passively investing in the underlying index. A portfolio of high-quality mid-sized companies with robust business models may hold the potential to become tomorrow’s large caps. The Nifty Midcap 150 Index has outperformed both the Nifty 100 Index and Nifty 50 Index in 7 out of 10 calendar years. Being an Exchange Traded Fund reduces the risk of stock selection by the fund manager. The fortune of this scheme will be closely linked to how the Nifty Midcap 150 Index performs.

However, do note that even though the scheme is a relatively low-cost option to participate in the midcap segment of the market, investment in mid-cap stocks is a high-risk – high-return investment proposition. The scheme may be prone to intensified market volatility in the near term, as the looming threat of the Omicron variant, RBI’s stance of monetary policy normalization amidst the inflationary pressures, and the recent geopolitical tensions between Russia-Ukraine with a surge in crude oil prices may pose a risk to the economic growth and would have an adverse impact on mid-sized companies. This may weigh down the NIFTY Midcap 150 Index and its top constituents.

After the swift rally seen in the last 18 months, the margin of safety in mid and small caps appears to be narrow, and the direction of the equity markets from the current elevated levels is uncertain. These factors, among many others, could have a bearing on the scheme’s performance.

Thus, Mirae Asset Nifty Midcap 150 ETF is suitable for investors with a long investment horizon of at least 5-7 years and a high-risk appetite to sustain the market volatility; however, you should ensure that your investment objective is aligned with the fund.

This article first appeared on PersonalFN here

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