Last Updated on January 30, 2020 at 12:00 pm
Only six midcap mutual funds (direct plan) managed to beat Nifty Midcap 150 TRI (dividends included) in the last five years (six becomes four if we consider regular plans). Let us take a look at how midcap funds performed in comparison to this index in the last 1,2,3,4 and 5 years.
Please note we do not recommend these funds. This data is only for one particular window in time. To analyse performance consistently, the reader can consider using the Jan 2020 Equity Mutual Fund Performance Screener. The aim of this study is to point out that even in the large cap space beating the index is not as easy as it seems.
As on Jan 29, 2020, only the following six funds (out of a total of 22) managed to outperform Nifty MIdcap 150 TRI over the last five years (trailing). These funds also outperformed the index over 1, 2 and 3 years.
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- Kotak Emerging Equity Fund
- Sahara Midcap Fund
- DSP Midcap Fund
- Axis Midcap Fund
- L&T Midcap Fund
- Invesco India Midcap Fund
The full list of funds and their five-year returns are shown below. The index returns are shown in blue and category average and median in red.
| Scheme Name | 5 Years |
| Kotak Emerging Equity Fund | 12.46 |
| Sahara Midcap Fund | 12.15 |
| DSP Midcap Fund | 11.89 |
| Axis Midcap Fund | 11.51 |
| L&T Midcap Fund | 11.41 |
| Invesco India Midcap Fund | 11.27 |
| Nifty Midcap 150 – TRI | 10.04 |
| Motilal Oswal Midcap 30 Fund | 10.00 |
| Edelweiss Mid Cap Fund | 9.83 |
| Tata Mid Cap Growth Fund | 9.74 |
| Franklin India Prima Fund | 9.56 |
| Taurus Discovery (Midcap) Fund | 9.55 |
| Category Median | 9.55 |
| HDFC Mid-Cap Opportunities Fund | 9.54 |
| BNP Paribas Mid Cap Fund | 9.48 |
| Category Average | 9.16 |
| Nippon India Growth Fund | 9.04 |
| Sundaram Mid Cap Fund | 8.65 |
| SBI Magnum Midcap Fund | 7.93 |
| Aditya Birla SL Midcap Fund | 7.68 |
| ICICI Pru Midcap Fund | 7.68 |
| UTI Mid Cap Fund | 7.30 |
| Quant Mid Cap Fund | 6.87 |
| PGIM India Midcap Opp Fund | 6.29 |
| Baroda Mid-cap Fund | 1.77 |
Nifty Midcap 150 TRI returned – 3.29% over the last two years (trailing). During this period 18 out of 23 funds managed to do better. Out of this 18, 10 of them managed a positive return. Over the last year (trailing) 16 out of 24 funds managed to beat the index.
The poor performance of the category over five years in spite of this recent recovery is notable. Few funds may have changed nature after the SEBI categorization but even then the outperformers are relatively few. Finally over the last three years (trailing), only 10 out of 23 funds managed to get a return better than the Nifty Midcap 150 TRI index
Does this mean we can consider passive investing in the midcap space? We have three ETFs and one index fund – Motilal Oswal Nifty Midcap 150 Index Fund (Should you invest?) – in this space.
However, none of them has been seriously tested during a big market crash or liquidity crunch in midcap stocks. An actively managed midcap fund has the freedom to hold up to 20% of large cap stocks and these can effectively act as “liquid cash” in case of redemption pressure. In addition, active midcap funds have done well during the last two years (when the index fell by – 3%). Such downside protection would be missing in a midcap index or ETF. Thus I would recommend those eager to invest passively in midcap stocks to wait and watch a little bit longer.