India’s mid-cap companies are making remarkable strides in both growth and market presence. These businesses, while smaller than large-cap giants, are fast becoming influential players in their respective sectors. For Non-Resident Indians (NRIs) looking to participate in India’s equity growth story, mid-cap mutual funds can offer an exciting investment avenue.
With the Securities and Exchange Board of India (SEBI) categorizing mid-cap stocks as those ranked 101 to 250 by market capitalization, these companies often show strong potential for expansion. For NRIs and OCIs (Overseas Citizens of India), mid-cap mutual funds present a practical way to gain exposure to these high-growth firms without the need to track individual stocks.
In this Article
What Are Mid-Cap Mutual Funds?
Mid-cap mutual funds are equity-oriented investment vehicles that allocate a minimum of 65% of their assets to mid-cap stocks. These companies usually have a market capitalization ranging from approximately ₹5,000 crore to ₹20,000 crore.
While they are generally more volatile than large-cap funds, mid-cap mutual funds offer better liquidity and relatively lower risk than small-cap funds. Because of their potential for high returns, these funds are ideal for aggressive investors with a long-term investment horizon.
Top Mid-Cap Mutual Funds for NRIs in 2025
Here is a curated list of top-performing mid-cap mutual funds that NRIs can consider in 2025, based on recent performance data:
- Motilal Oswal Midcap Fund
1-Year Return: 60.80% | 5-Year Return: 33.60% | Since Inception: 24.20% - Quant Mid Cap Fund
1-Year Return: 55.90% | 5-Year Return: 37% | Since Inception: 14.50% - Nippon India Growth Fund
1-Year Return: 50.90% | 5-Year Return: 30.70% | Since Inception: 23% - HDFC Midcap Opportunities Fund
1-Year Return: 46.70% | 5-Year Return: 30% | Since Inception: 20% - Mirae Asset Midcap Fund
1-Year Return: 39.40% | 5-Year Return: 28.80% | Since Inception: 28.30%
These funds are managed by reputed fund houses and offer a blend of stability and aggressive growth through diversified mid-cap holdings.
How Do Mid-Cap Funds Operate?
Mid-cap mutual funds focus on investing in medium-sized companies that are typically more agile and innovative than their large-cap counterparts. Fund managers use financial metrics, growth trends, and sectoral opportunities to select stocks.
To manage risk, these funds are diversified across sectors such as manufacturing, technology, pharmaceuticals, and finance. Investors can expect higher volatility in the short term, but those with a 5-10 year investment horizon may benefit from strong capital appreciation.
Who Should Consider Investing?
These funds are best suited for investors who:
- Have a high-risk tolerance
- Are familiar with equity markets
- Aim for long-term wealth creation
NRIs interested in mid-cap mutual funds should ensure that their overall portfolio aligns with their risk appetite and investment goals.
Tax Implications for NRIs
NRIs investing in Indian mutual funds are subject to capital gains tax and Tax Deducted at Source (TDS).
Old Regime:
- Short-Term Capital Gains (if held <12 months): 15%
- Long-Term Capital Gains (if held >12 months): 10% (exempt up to ₹1 lakh)
- TDS on Redemption: 15% for STCG, 10% for LTCG
Budget 2025 Updates:
- NRIs can continue to claim tax benefits under the Double Taxation Avoidance Agreement (DTAA), which may help reduce their tax liabilities.
Tools to Make Investing Easier
Platforms like iNRI offer AI-powered Smart Investing Tools to help NRIs identify funds that match their financial goals and risk profiles. These tools simplify the fund selection process and offer end-to-end assistance for a seamless investment experience.
Mid-cap mutual funds offer an excellent opportunity for NRIs to benefit from India’s dynamic and fast-growing companies. While they do carry higher risk, the potential for substantial returns over the long term makes them worth considering.
If you’re an NRI looking to add growth-oriented equity exposure to your portfolio, now might be the right time to explore mid-cap mutual funds. Consider speaking with a financial advisor or using trusted digital tools to make informed decisions and optimize your investment outcomes.