Investors looking for long-term wealth creation through mutual funds have found a winner in the Tata Midcap Growth Fund. This fund has transformed the small SIP (Systematic Investment Plan) of Rs 3,000 per month into a massive Rs 3.5 crore over 30 years. Starting with a modest total investment of Rs 10.8 lakh, investors have reaped a net profit of approximately Rs 3.4 crore. The success of this fund shows how long-term investing and compounding can create significant wealth for investors.
Impressive Growth of Tata Midcap Growth Fund Over the Years
Launched in 1994, Tata Midcap Growth Fund has consistently delivered strong returns, especially for those who remained invested for the long haul. Investors who started an SIP 30 years ago are now sitting on more than Rs 3.5 crore, thanks to an annualized return of 18.60%.
Here’s a snapshot of returns based on a Rs 3,000 monthly SIP:
- 30-year SIP Investment: Rs 10,80,000
Value after 30 years: Rs 3.52 crore
Annualized return: 18.60% - 20-year SIP Investment: Rs 7,20,000
Value after 20 years: Rs 62.61 lakh
Annualized return: 18.64% - 10-year SIP Investment: Rs 3,60,000
Value after 10 years: Rs 11.25 lakh
Annualized return: 21.6%
The fund has performed exceptionally well, especially for long-term investors. With compounding working in their favor, those who continued their SIPs for decades have seen their wealth multiply several times.
One-Time Investment Also Grows Substantially
Even for those who prefer lump-sum investments, Tata Midcap Growth Fund has delivered remarkable results. A one-time investment of Rs 1 lakh in the fund 20 years ago has grown 37 times to Rs 36.90 lakh, offering an annualized return of 19.25%.
Here’s a look at the returns for a one-time investment in the fund:
- 1-year return: 49.18%
- 3-year return: 24.09%
- 5-year return: 26.87%
- 10-year return: 18.69%
- 20-year return: 19.25%
For investors with a longer investment horizon, the growth is striking. The fund’s strong performance across various time frames highlights its potential as a wealth-building tool.
What Makes Tata Midcap Growth Fund Stand Out?
The fund follows a solid investment strategy that primarily focuses on mid-cap companies. It invests around 97.75% of its assets in equity or equity-related instruments, ensuring significant exposure to growth opportunities in mid-sized companies.
The fund’s portfolio is well-diversified across sectors such as industrials, healthcare, finance, consumer discretionary, and technology. Some of the top stocks in the portfolio include:
- Aurobindo Pharma
- Alkem Laboratories
- Cummins India
- Muthoot Finance
- Max Financial
- UNO Minda
- P.I. Industries
- Lupin
- JSW Infrastructure
- Thermax
- AIA Engineering
This diversified approach helps in balancing risk while offering growth potential. The fund’s focus on mid-cap companies allows investors to benefit from companies that are at a growing stage but have the potential to become large-cap giants.
Why the Quantitative Growth Strategy Matters
Tata Midcap Growth Fund uses a quantitative growth strategy. This approach involves using data-driven analysis and algorithms to select stocks, ensuring a more disciplined and research-based investment process. As a result, the fund minimizes human bias and focuses on growth and profitability factors while selecting companies.
The quantitative strategy has paid off well for the fund, which is why it has managed to consistently deliver high returns over time.
Key Details About Tata Midcap Growth Fund
- Launch Date: July 1, 1994
- Expense Ratio: 1.87% (as of August 31, 2024)
- AUM: Rs 4,514 crore (as of August 31, 2024)
- Minimum SIP Investment: Rs 500
- Minimum Lump Sum Investment: Rs 5,000
- Benchmark: NIFTY Midcap 150 TRI
- Risk Level: Very high
The fund has proven to be a wealth generator for long-term investors, despite the high risk associated with mid-cap funds. Investors who can handle the volatility and stay invested for a long period are likely to reap significant rewards.
For those looking to start small but with the potential to grow their investment manifold over time, Tata Midcap Growth Fund remains a top choice. Whether through SIP or lump-sum, the fund has shown that disciplined investing over time can yield incredible results.
(Disclaimer: The purpose of this article is only to provide information, not to recommend investment. Take any investment decision only after consulting your investment advisor.)
