In response to our recent articles on the performance of active mid-cap and small-cap funds versus the Nifty Midcap 150*, a viewer on YouTube suggested that 5-year rolling returns are insufficient to judge these funds, as they are typically recommended for longer periods. We should look at longer periods.
These are the articles:
- Active Small Cap Mutual Funds vs Nifty Midcap 150 – this also explains why we chose to benchmark performance with a midcap index instead of a small cap index.
- Active Mid Cap Mutual Funds vs Nifty Midcap 150
I disagree with this notion. Of course, one should not invest in equity for only 5Y, but that is not the point here. If an active fund struggles over 5Y, why should I pay extra fees in the hope that it will outperform over longer durations? I shall be happy with an index fund.
Anyway, for what it is worth, this is the data over longer periods. However, be warned that the data has several issues (1) direct plans did not exist before 2013, (2) many active funds changed strategy over time, sometime multiple times, (3) we have mid cap 150 data only from April 2005.
Reward measure: Rolling returns outperformance consistency.
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
Rolling returns are a straightforward measure of how consistently a fund has outperformed its benchmark. Take, for example, the Nippon India Small Cap Fund vs Nifty Midcap 150 (graph below) between January 1, 2013, and Sep 12, 2025. There are 1891 5-year rolling returns. If the returns for each of these durations are plotted for the fund and the index together, we will get a graph like this.
The fund has outperformed the index 1891 out of 1891 times. Thus, the rolling return outperformance consistency over seven years is 100%, indicating excellent 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.
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 Small Cap Funds vs Nifty Midcap 150 TRI
Many of these funds have a mixed history – some started as mid- and small-cap funds, while others began as closed funds, etc. Quant Small Cap was a debt fund! So it is not part of this analysis.
Direct plans (limited data, as they were introduced only on January 1st, 2013).
- Over 7 years, only 7 out of 14 funds qualified (rolling return outperformance consistency of 70% or more)
- Over 10 years, 6 out of 9 funds qualified; however, among these six, three were new and had fewer than 500 data points. The oldest fund has only 650 data points.
Regular plans (do not expect stellar performance, as the high commissions will eat away at returns)
- Over 7 years, only 2 out of 9 funds qualified (rolling return outperformance consistency of 70% or more)
- Over 10 years, 4 out 9 qualified.
Active Mid Cap Funds vs Nifty Midcap 150 TRI
Direct plans
- Over 7 years, only 7 out of 20 funds qualified (rolling return outperformance consistency of 70% or more)
- Over 10 years, 4 out 12 qualified.
Regular plans
- Over 7 years, only 2out of 16 funds qualified (rolling return outperformance consistency of 70% or more)
- Over 10 years, only 2 out 14 qualified.
Should we give more time for active mid- and small-cap MFs to beat the index? Absolutely not!
The rolling returns data over a longer duration affirms our earlier recommendations. There is little point in buying active small-cap and mid-cap funds.
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?
Regardless of your choice, never assume yours is superior. Always expect periods of underperformance, during which your patience and conviction will be heavily tested. That is the price you need to pay for building wealth via equities.
We are on Google News
Use this button to add freefincal.com as a preferred personal finance source on Google News.
Explore 1,400+ videos on YouTube!
Subscribe to get posts via email!
Join 32,000+ readers and get free money management solutions delivered to your inbox! (Link takes you to our email sign-up form)Join our WhatsApp Channel
Explore our products
🔥Join our community of 9000+ users! 🔥- Use our Robo-advisory Tool to create a complete financial plan! More than 3,500 investors and advisors use this! Use the discount code robo25 for 20% off. Plan your retirement (early, normal, before, and after), plus non-recurring financial goals (such as child education) and recurring financial goals (such as holidays and appliance purchases). The tool helps anyone aged 18 to 80 plan for retirement, plus six non-recurring and four recurring financial goals, with a detailed cash flow summary.
- Our Flagship Course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market conditions! Watch the first lecture for free! One-time payment! No recurring fees! Lifelong access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
- Join the freefincal investor circle! An exclusive space for investors, advisors, fintech employees and students to access financial planning and insurance tools, mutual fund and stock analysis tools, coding strategies and Excel macros for data extraction. 750+ members are now part of our investor circle.
- Increase your income by getting people to pay for your skills! More than 900 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for side or passive income, we will show you how to do it by showcasing your skills and building a community that trusts and pays you. (Watch the 1st lecture for free). One-time payment! No recurring fees! Lifelong access to videos!
- Portfolio Tracker! Track your mutual funds and stock investments with our Google Sheet!
- We also publish monthly screeners for
Our Podcast: Let's Get Rich With Pattu
On Spotify: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! On Audible: Listen to the Let's Get Rich with Pattu Podcast
Listen to the Let's Get Rich With Pattu podcast on YouTube.
Now watch Let's Get Rich With Pattu தமிழில் (in Tamil)!About The Author
Dr M Pattabiraman giving a lecture
- Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras.
- He has over 14 years of experience publishing news analysis, research and financial product development. He has over 28 years of teaching and research experience. He is also a public speaker and keynote presenter.
- He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.
- Connect with him via @pattufreefincal on X LinkedIn YouTube
- Pattabiraman has co-authored three print books.
This book helps you ask the right questions and find the right answers. It also includes nine online calculators to create custom solutions.
(2) Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want. 
Both the boy and girl versions of "Chinchu Gets a Superpower".
Most investor problems stem from a lack of poor decision-making. We made bad decisions and money mistakes when we started earning, and we spent years undoing them. Why should our children go through the same pain? What is this book about? As parents, what if we had to groom one ability in our children that matters not only for money management and investing but for every aspect of life? My answer: Sound decision-making. So, in this book, we meet Chinchu, who is about to turn 10. The story follows what he wants for his birthday and how his parents plan it, while also teaching him key ideas about decision-making and money management. What readers say! 
Feedback from a young reader after reading Chinchu Gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from a young age. The importance of money management and decision-making based on their wants and needs. Very nicely written in simple terms. - Arun.
About freefincal & its content policy
Freefincal is a News Media organisation dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact Information: To get in touch, please use our contact form. (Sponsored posts or paid collaborations will not be entertained.)Our publications
- Your Ultimate Guide to Travel. This is an in-depth exploration of vacation planning, including how to find affordable flights, budget accommodations, and practical travel tips. It also examines the benefits of travelling slowly, both financially and psychologically, with links to relevant web pages and guidance at every step. Get the PDF for Rs 300 (instant download)
- How to profit from content writing: Our ebook is for those interested in getting a side income via content writing. It is available at a 50% discount for Rs. 500 only!