Mumbai, June 2, 2025: Tata Asset Management (Tata MF) today announced the launch of its new passive investment offering, the Tata Nifty Midcap 150 Index Fund. This open-ended equity midcap fund aims to track the performance of the NIFTY Midcap 150 TRI Index, providing investors with an opportunity to participate in the growth potential of India’s mid-sized companies.
The New Fund Offer (NFO) opened for subscription today, June 2, 2025, and will remain open until June 16, 2025.
Investors can begin their investment journey in this fund with a minimum amount of ₹5,000, with subsequent investments allowed in multiples of ₹1. The fund will be managed by Kapil Menon and Rakesh Prajapati. While the scheme does not have a lock-in period, an exit load of 0.25% will be applicable for redemptions within the first 15 days of investment. The risk level associated with this scheme is categorized as “very high.”
Investment Strategy:
The Tata Nifty Midcap 150 Index Fund will follow a passive investment strategy, aiming to replicate the performance of its benchmark index, the Nifty Midcap 150 TRI Index. Tata MF believes this approach offers a disciplined and low-cost investment avenue, potentially mitigating risk. Historically, midcap stocks have demonstrated strong performance, outperforming both large-cap and small-cap stocks under a Systematic Investment Plan (SIP) over the long term. Data from the last 20 years suggests that midcaps have delivered an additional annual compound growth rate (CAGR) of approximately 4% and 2% compared to largecaps and smallcaps, respectively.
Portfolio Allocation:
The fund will predominantly invest (95% to 100% of its assets) in the equity shares of companies included in the Nifty Midcap 150 index, which carries a very high risk. A smaller portion (0% to 5%) may be allocated to debt and money market instruments, including treasury bills and other mutual fund schemes, which carry a low risk.
Who Should Invest?
This passive fund is positioned as an attractive option for long-term investors seeking to capitalize on India’s evolving economic landscape. It is particularly suitable for those who prefer low-cost, rule-based investing and wish to diversify their equity portfolio beyond large-cap stocks. SIP investors with a investment horizon of 5 to 10 years who anticipate compounded returns may also find this fund appealing.
Anand Varadarajan, Chief Business Officer, Tata Asset Management, emphasized the growth potential of the midcap segment, stating, “The midcap segment represents the next frontiers of India’s growth journey. Through Tata Nifty Midcap 150 Index Fund, investors can gain access to potential growth sectors and companies that will play a key role in India’s next economic expansion phase.” He further added that the fund is ideal for long-term investors seeking a blend of growth and diversification through the disciplined approach of passive investing.
The Midcap Advantage:
Despite recent market fluctuations causing some correction in midcap stocks, their historical long-term outperformance compared to large-cap stocks underscores investor confidence in this segment. The Nifty Midcap 150 TRI index has delivered a 1-year rolling return of 21.89% and a 3-year rolling return of 15.8%, significantly higher than the Nifty 50 TRI’s returns of 16.37% and 12.38% respectively (data as of April 30, 2025).
The Nifty Midcap 150 index offers broad diversification, comprising companies from 20 sectors and 74 basic industries. Notably, 39 industries within the midcap segment are not represented in the large-cap space, contributing over 40% to the index’s total weightage. This highlights the unique diversification benefits offered by midcap investments. Furthermore, in the last five years, 17 companies have transitioned from the midcap segment to the large-cap space, demonstrating the wealth creation potential inherent in this market segment.