In our previous article, we had discussed the buzzing large cap and diversified equity funds. In the last 6 months large cap and diversified equity funds categories have given average returns of 26 – 30%. While the returns of large cap and diversified equity funds have been great, the returns of the midcap funds have been phenomenal this year. Small and Midcap funds category has given average returns of over 50% in the last 6 months. Infrastructure funds, as a category, have done even better. Infrastructure funds category has given average returns of over 58% in the last 6 months. In this article, we will discuss the buzzing midcap and sector funds in 2014, based on the returns in the last 6 months.

For our selection of buzzing funds, we have applied a few filters. Firstly, we have selected only those funds which have at least Rs 100 crores of assets under management (AUM). Also, we have excluded funds, which have been ranked "Below Average Performers" or "Relatively Weak Performers" by CRISIL in their latest mutual fund ranking, even though they may have given very high returns in 2014. Finally, in this article we have shown the returns of the Regular Plans only. Direct plans can give a few percentage points higher returns than Regular Plans. Investors should note that, we are not making fund recommendations here. We are just reporting funds that gave the highest returns based on the criteria mentioned above. Investors should not go with short term performance, when selecting mutual funds for investment, because short term performance may not be sustained in the future.

Top Performing Small and Midcap Funds to invest in 2016

As discussed earlier, small and midcap funds as a category has given average returns of more than 50% in the last 6 months. Small and midcap funds are more volatile than large cap and diversified equity funds. However, they have the potential to deliver superior returns in the long term, since midcap and small cap companies tend to be more undervalued relative to large cap companies. The buzzing funds in this category have given the highest returns in the last 6 months, based on the criteria discussed earlier, and include perennial favourites like the ICICI Prudential Value Discovery Fund, Sundaram Select Midcap, UTI Mid Cap and Franklin India Smaller Companies funds along with a number of funds with much smaller AUMs. The buzzing funds in this category have given returns of over 57% in just the last six months. We had reviewed a number of these funds over the past few months (please visit the Mutual Funds sub-section in our Articles section). The table below shows the buzzing small and midcap funds (growth option).