Motilal Oswal Nifty Midcap 150 Index Fund: Should you invest?

Published: August 20, 2019 at 9:20 am

Last Updated on December 29, 2021 at 4:58 pm

Motilal Oswal Nifty Midcap 150 Index Fund opens for investment from Aug 19th. It is India’s second midcap Index fund. Principal AMC ran an index that tracked the Nifty Midcap 100 Index from May 2014 to June 2017*. In this article let us compare the performance of Nifty Midcap 150 with active mid cap funds and find out if it makes sense for investors to consider this fund.

What is the Nifty Midcap 150 Index?  Like we discussed in the Motilal Oswal Nifty 500 Fund Review, out of the top 500 stocks by free-float market cap listed on the NSE, the top 50 from the Nifty 50, the next 50 form the Nifty Next 50, the top 100 form the Nifty 100, the next 150 form the Nifty 150 Mid cap index. The top 100 stocks are classified (quite arbitrarily!) as large cap, the middle 150 as mid cap and the bottom 250 as small cap. Also see: Motilal Oswal Nifty Smallcap 250 Index Fund: Will this make a difference?

* See: Why Value Research is wrong to offer one star to Principal Nifty 100 Equal Weight Fund. Now, we just discussed that both small cap and mid cap actively managed funds should be benchmarked against the Nifty Midcap 150: Why your small cap mutual fund must beat this benchmark! So let us use the Aug 2019 Equity Mutual Fund Performance Screener and find out how active mid cap funds have fared against the Index.

Nifty Midcap 150 Index Fund Performance

In this detailed article, Large Cap vs Mid Cap vs Small Cap Funds: Which is better for long term investing? I had published the following rolling return charts. To understand what is a rolling return, check out this video.


Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

Large Cap vs Mid Cap vs Small Cap: 5 years

Large Cap vs Mid Cap vs Small Cap: seven years

The first lesson from the above graphs is, that the Nifty Midcap 150 need not outperform a large cap index like Nifty 100 (or NIfty 50) over 5 or 7 years even. So do not expect it to. In my opinion, with respect to Motilal Oswal Nifty Midcap 150 Index Fund, investors should ask this question:

Is the Nifty Midcap 150 index a replacement for Nifty Next 50 index?

To find out, we need to compare the risk and reward of both indices.

Nifty Midcap 150 vs Nifty Next 50

Let us now compare every possible five and ten-year returns and risk (standard deviation) of both indices.

Nifty Midcap 150 TRI vs Nifty Next 50 TRI Five year rolling returns comparison

Notice that over the 2333 5-year returns studied. the Nifty Midcap 150 index has at best provided a return comparable to Nifty Next 50. The risk over this period is shown below and it is seen that the Midcap index has a touch lower risk due to the higher number of stocks, but it is not significant.

Nifty Midcap 150 TRI vs Nifty Next 50 TRI Five year rolling risk comparison with standard deviationThe same observations can also be made over ten years.

Nifty Midcap 150 TRI vs Nifty Next 50 TRI Ten year rolling returns comparison
Nifty Midcap 150 TRI vs Nifty Next 50 TRI Ten year rolling risk comparison with standard deviation
Therefore, there is no compelling reason to choose Motilal Oswal Nifty Midcap 150 Index Fund over established Nifty Next 50 Index funds. Surprised that the Nifty Next 50 behaves this way? That is because Nifty Next 50 is NOT a large cap index!

Nifty Midcap 150 vs Active Mid cap Mutual Funds

The next step is to evaluate how tough this index is to beat. Using the Aug 2019 Equity Mutual Fund Performance Screener we compare 23 active Mid cap funds with this index over every possible 1,2,3,4,5 durations in terms of return outperformance and downside protection consistency (fund falling lower than index when the index falls).

We first demand 70% return outperformance over 5,4, and 3 years. That is, if there are 100 five-year returns, the fund should have beat the index at least in 70 of those durations.

Selecting the five-year filter reduces the 23 to 10! Add the four-year filter and it becomes 4!! Add the three-year filer and then it reduces to just two active funds!!

This is the reason I had earlier written, Why we badly need a Midcap & Smallcap Index Fund: Performance Comparison with Nifty Midcap 100 & Nifty Next 50. However, when you see the comparison with Nifty Next 50, it is clear that we have always had such an index: The Nifty Next 50.

Motilal Oswal Nifty Midcap 150 Index Fund: Should you invest?

You can, but there is no need to. If you can tolerate the risk, use a Nifty Next 50 in suitable proportions. See: Combine Nifty & Nifty Next 50 funds to create large, mid cap index portfolios.

There are well established Nifty Next 50 Index funds and ETFs. However keep this in mind: ETFs vs Index Funds: Stop assuming lower expenses equals higher returns! Plus: ICICI Nifty Next 50 Index Fund vs Reliance ETF Junior BeEs.

There is no need to invest in Motilal Oswal Nifty Midcap 150 Index Fund which is new and therefore has no history of tracking error. Nifty Next 50 offers you similar (often better) returns and comparable (a touch higher) risk. Convinced? Check this out: What is the best way to invest in Nifty Next 50 Index?

Also see: Motilal Oswal Nifty Smallcap 250 Index Fund: Will this make a difference?

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr 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 ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 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 condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 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 who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
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 their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization 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: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)