Mid Cap Mutual Funds offer you the opportunity to create significant long-term wealth. Historical data suggests that Mid Cap Mutual Funds have the ability to outperform Large Cap Mutual Funds over the long term.

If you carefully select Mid Cap Funds for your portfolio, you can reap high returns that will help you address long-term goals such as Children’s education/marriage, your retirement, buying your dream home, etc.

PGIM India Midcap Opportunities Fund is a well-managed Midcap Fund that has turned out to be one of the top performers in the category by focusing on quality stocks in the mid-cap segment.

Graph 1: Growth of Rs 10,000 if invested in PGIM India Midcap Opportunities Fund 5 years ago

Graph 1

Past performance is not an indicator of future returns
Data as on December 27, 2022
(Source: ACE MF) 

PGIM India Midcap Opportunities Fund is a growth-oriented mid-cap biased fund that aims to offer greater growth potential as compared to large caps but at a lower volatility and risk as compared to small caps. While selecting stocks, PGIM India Midcap Opportunities Fund considers valuation as well as growth parameters such as margins, asset returns, and cash flows, amongst others. Launched in December 2013, the fund remained among the underperformers in its first 5 years. However, with a focus on high-quality stocks, it recorded a major breakthrough run in recent years. During the market crash in 2020, the fund stood among the category outperformers. Moreover, the fund participated well in the ensuing recovery and bull phase and turned out to be one of the top performers, not only in the Mid-cap Fund category but across diversified equity funds. With the extraordinary performance recorded in the last few years, PGIM India Midcap Opportunities Fund has shown a remarkable improvement in its performance across time periods. Over the past 5 years, PGIM India Midcap Opportunities Fund has rewarded investors with a CAGR of around 17.8%, as against the 11.2% CAGR delivered by its benchmark Nifty Midcap 150 – TRI index. An investment of Rs 10,000 in PGIM India Midcap Opportunities Fund five years back would have now appreciated to Rs 22,669.

Table: PGIM India Midcap Opportunities Fund’s performance vis-á-vis category peers

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
Quant Mid Cap Fund 1,273 20.05 35.64 37.90 20.70 18.48 24.38 0.37
PGIM India Midcap Opp Fund 7,577 2.64 30.31 36.24 17.77 17.56 24.42 0.38
SBI Magnum Midcap Fund 8,436 5.86 27.24 27.91 11.87 14.17 24.80 0.28
Edelweiss Mid Cap Fund 2,478 5.13 26.29 26.46 13.19 16.48 24.70 0.28
Mirae Asset Midcap Fund 8,953 7.66 26.80 26.04 24.50 0.27
Kotak Emerging Equity Fund 23,224 8.51 26.54 25.19 14.11 17.76 24.04 0.27
Motilal Oswal Midcap Fund 3,657 13.06 33.47 24.86 13.89 15.36 25.15 0.26
HDFC Mid-Cap Opportunities Fund 36,158 14.82 26.45 24.70 12.03 16.08 24.33 0.26
UTI Mid Cap Fund 7,345 2.60 21.03 24.65 11.05 14.04 23.54 0.27
Nippon India Growth Fund 13,861 8.38 25.90 24.57 13.36 16.06 24.60 0.26
Nifty Midcap 150 – TRI 5.44 24.41 24.39 11.20 15.98 25.91 0.25

Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on December 27, 2022
(Source: ACE MF)
*Please note, this table only represents the best-performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not an indicator of future returns. The percentage returns shown are only for indicative purposes.

PGIM India Midcap Opportunities Fund has registered superior performance in the last few years and has managed to generate an alpha of around 6% to 12% CAGR over its benchmark Nifty Midcap 150 – TRI Index. The recent outperformance has also helped the fund improve its long-term performance as well and has managed to generate a significant lead over the category average and the benchmark across time periods. On a longer time periods of 5-year and 7-year, the fund has a clear lead over its benchmark and the category average.

On risk-return parameters, PGIM India Midcap Opportunities Fund has encountered higher volatility (24.42%) when compared to some of its category peers but is still much lower than the benchmark. The fund’s superior outperformance over the last few years has helped it generate higher risk-adjusted returns for investors. Its Sharpe (0.38) is currently the highest in the Mid-cap Funds category, thus rewarding investors with superior risk-adjusted returns.

Investment strategy of PGIM India Midcap Opportunities Fund

PGIM India Midcap Opportunities Fund is a midcap fund that is mandated to invest a minimum of 65% of its assets in mid-cap stocks (defined as stocks between 101 to 250 ranked as per market capitalisation). The fund looks to identify quality midcap stocks which can benefit from a favourable economic environment based on extensive research and a thorough selection process.

PGIM India Midcap Opportunities Fund follows a combination of the top-down and bottom-up approach to select quality mid-cap stocks across sectors. While selecting stocks the fund managers look at the current and historical financial condition of the company, potential value creation/unlocking of value and its impact on earnings growth, capital structure, business prospects, policy environment, the strength of management, responsiveness to business conditions, product profile, brand equity, market share, competitive edge, research, technological know-how, and corporate governance.

The fund holds top 40%-45% of its portfolio in ‘Stable Growth’, i.e. companies with stable earnings and strong earnings visibility (of 14-16%); mid 40%-45% of the portfolio is in ‘High Growth’ stocks, i.e. companies with strong earnings growth (of above 20%); and bottom 10%-20% of the portfolio in ‘Turnaround’ stocks, i.e. Turn around stories and good companies going through bad times with significant potential for alpha generation.

Graph 2: Top portfolio holdings in PGIM India Midcap Opportunities Fund

Graph 2Graph 2

Holding in (%) as of November 30, 2022
(Source: ACE MF)

PGIM India Midcap Opportunities Fund invests in a well-diversified portfolio of 50-55 stocks, limiting exposure to single stocks within the 5% mark. As of November 30, 2022, PGIM India Midcap Opportunities Fund held a fairly diversified portfolio of 47 stocks. The top-10 stocks accounted for around 33.6% of its assets, with names like Timken India, HDFC Bank, ICICI Bank, Cummins India, Kajaria Ceramics, Bata India, and Dalmia Bharat among its top 10 holdings. Although the fund follows a buy-and-hold investment strategy, it is nimble in its approach. It does not hesitate to churn a small portion of its portfolio to capture attractive opportunities in the mid-cap segment.

In the last one year, PGIM India Midcap Opportunities Fund has gained immensely from its holding in Timken India, Varun Beverages, Cummins India, The Federal Bank, ABB India, The Indian Hotels Company, ICICI Bank, TVS Motor Company, Canara Bank, Ashok Leyland, SKF India, among others.

PGIM India Midcap Opportunities Fund is benchmark agnostic, holding a low overlap of 30%-35% with the benchmark and is overweight on sectors which are currently underbought. In terms of sector holdings, its portfolio is majorly exposed to Banking & Finance, Engineering, and Consumption, that collectively account for 45.1% of its assets. The fund’s other core sectors include Construction, Consumer Durables, Pharma, Chemicals, Infotech, Auto, Retail, and Transportation, among others.


PGIM India Midcap Opportunities Fund’s performance is driven by prudent investment strategies and backed by strong systems and processes followed at the fund house. The fund has shown a turnaround performance in the last few years and has showcased its potential to generate market-beating returns in the long run at a reasonable risk.

As PGIM India Midcap Opportunities Fund is benchmark agnostic, the investments in stocks shortlisted using various parameters are typically made at the conviction of the fund manager, irrespective of their weightage in the index. Certainly, the performance of the fund may deviate significantly from the benchmark. Even though PGIM India Midcap Opportunities Fund follows an active investment strategy and has a penchant to churn a major portion of its portfolio, it has shown a lot of patience with many of its quality stocks and sectorial bets, which have paid off its investors in due course. Such an approach may work in favour of the fund in the long run.

PGIM India Midcap Opportunities Fund is suitable for investors with a high-risk appetite looking for an actively managed Mid-cap Fund with an investment horizon of at least 5-7 years.

Note:  This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

This article first appeared on PersonalFN here

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