We discuss the performance consistency of actively managed mid cap funds by comparing them with the Nifty Midcap 150 index.
The freefincal active equity mutual fund screener, published monthly, uses the Midcap 150 to compare small cap funds. It also uses Midcap 150 Quality 50. We do not include the factor indices in this study as they themselves have an active component. This is the link to the latest screener. If you are reading this article later, use the first link in this paragraph to access the archive of screeners (the latest will be on top).
Reward measure: Rolling returns outperformance consistency.
Rolling returns are a simple estimate of how consistently a fund has outperformed a benchmark. Take, for example, the Aditya Birla Sun Life Midcap Fund – Growth – Direct Plan vs Nifty Midcap 150 (graph below) between January 1, 2013, and Sep 17, 2025. There are 1896 5-year rolling returns. If the return for each of these durations is plotted for the fund and index together, we will get a graph like this.
The fund has only outperformed the index 88 out of 1896 times. Thus, the rolling return outperformance consistency over seven years is 88/1896 = 4.64% indicating poor performance. A consistent performer should beat the index at least 60% to 70% of the time. So, the higher the rolling return outperformance consistency, the better.
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For the high fees the AMCs charge, we expect a performance consistency of 70%. If they fail, then they do not deserve such high fees. We are better off with an index fund.
Active Mid Cap Funds vs Nifty Midcap 150 TRI
- Over 5 years, only 11 out of 51 funds qualified (rolling return outperformance consistency of 70% or more)
- Over 4 years, only 9 out of 53 funds qualified.
- Over 3 years, only 8 out of 53 funds qualified.
- Over 5 and 4 years, only 8 out of 51 funds qualified.
- Over 5, 4, and 3 years, only 7 out of 51 funds qualified.
You can use our screener to find out fund names, but it is not the point. We must appreciate that very few funds manage to beat the Nifty Midcap 150 consistently. So we are better off without active mid cap funds. We came to the same conclusion for active small cap funds! Active Small Cap Mutual Funds vs Nifty Midcap 150.
So, can we invest in a Nifty Midcap 150 index fund?
While it is not a terrible choice, investors must appreciate that this segment can underperform large cap stocks for years. The index, comprising 150 stocks with relatively lower liquidity than large caps (higher impact costs), may exhibit high tracking errors during market stress. So we do not recommend this either.
We suggest four choices.
- Consider sticking to a simple Nifty 50, Sensex 30, or even a Nifty 100 index fund.
- If you want “some” mid cap exposure, use a Nifty Next 50 index fund with the right expectations – Nifty vs Nifty Next 50 vs Nifty Midcap 150 vs Nifty Smallcap 250: Return Comparison Sep 2025
- If you want whole market coverage, consider a Nifty 500 index fund, but with the right expectations – Nifty 50 or Nifty 500, which index fund should I choose? This will have some small cap exposure and satisfy FOMO better!
- If you want more concentrated mid cap exposure, consider the Nifty Large Midcap 250 – but again, understand the risks. See: Can I invest in a Nifty LargeMidcap 250 Index Fund?
We often get asked, “Can I invest in Nifty 50 + Nifty Midcap 150 or Nifty 100 + Nifty Midcap 150?” The answer is yes, provided you understand and appreciate the risks of holding a mid cap index.
Regardless of your choice, never assume yours is superior. Always expect periods of underperformance where your patience and conviction will be heavily tested. That is the price you need to pay for building wealth via equities.
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