Last Updated on June 28, 2020
In this report, we evaluate how actively managed midcap mutual funds have fared against the Nifty Next 50 Total Returns Index. Only three midcap mutual funds have beat Nifty Next 50 consistently over every possible 3,4 and 5 year periods.
Why is this comparison made: Nifty Next 50 has a risk and reward almost identical to that of the Nifty Midcap 150 Index. In fact, Nifty Next 50 is a bit more volatile. See: Worried about Nifty Next 50 Index? What you need to know. This makes the comparison with midcap fund a natural extension.
Investors must appreciate the strange nature of the Nifty Next 50. Although it is “technically” part of the large cap universe, it is illiquid and therefore quite volatile as explained before Warning! Even “large cap” stocks are not liquid enough! Can you handle this?
We shall consider rolling returns. That is, we shall compare every possible 1,2,3,4 and 5 year return periods possible from 1st Jan 2013 (from the inception of direct plans) to June 19th 2020. We shall only consider funds that have enough history to generate 1000 or more 1,2 and 3-year rolling return data points.
This is the full list of 22 midcap funds considered for the study. Among these, Edelweiss Mid Cap Fund, IDBI Midcap Fund and Mahindra Unnati Emerging Business Yojana were removed as the no of rolling return one-year data points were less than thousand (young funds with short history). DHFL Pramerica Midcap Opportunities Fund was also not considered as its 3-year history resulted in less than a thousand data points. These funds are indicated in red below.
| DSP Midcap Fund – Direct Plan – Growth |
| Invesco India Midcap Fund – Direct Plan – Growth Option |
| L&T Mid Cap Fund-Direct Plan-Growth |
| Kotak Emerging Equity Scheme – Growth – Direct |
| Axis Midcap Fund – Direct Plan – Growth |
| Franklin India Prima Fund – Direct – Growth |
| Taurus Discovery (Midcap) Fund-Direct Plan-Growth Option |
| Tata Mid Cap Growth Fund – Direct Plan Growth |
| HDFC Mid Cap Opportunities Fund -Direct Plan – Growth Option |
| Motilal Oswal Midcap 30 Fund (MOF30)-Direct Plan-Growth Option |
| BNP Paribas Mid Cap Fund – Direct Plan – Growth Option |
| Sundaram Mid Cap Fund- Direct Plan – Growth Option |
| Aditya Birla Sun Life Midcap Fund – Growth – Direct Plan |
| UTI Mid Cap Fund-Growth Option- Direct |
| SBI Magnum MIDCAP FUND – DIRECT PLAN – GROWTH |
| Reliance Growth Fund – Direct Plan Growth Plan – Growth Option |
| Baroda Mid-cap Fund- Plan B (Direct) – Growth Option |
| Quant Mid Cap Fund-Growth Option-Direct Plan |
| DHFL Pramerica Midcap Opportunities Fund – Direct Plan – Growth Option |
| Edelweiss Mid Cap Fund – Direct Plan – Growth Option |
| IDBI Midcap Fund Growth Direct |
| Mahindra Unnati Emerging Business Yojana – Direct Plan – Growth |
Five years: 11/18 funds have outperformed Nifty Next 50 (NN50)with a consistency of 70% or more. For example, DSP Midcap Fund got a better return than NN50 over five years 604 out of 604 times or 100%. Let us call this performance consistency. HDFC Mid Cap Opportunities Fund beat NN50 463 out of 605 times equivalent to a performance consistency of 76.5%
Four years: Only 6/18 funds managed 70% or more performance consistency!
Three years: Only 3/18 funds managed 70% or more performance consistency!
Two years: Only 3/18 funds managed 70% or more performance consistency!
one year: Only 1/18 funds managed 70% or more performance consistency!
These are the three funds that qualified as above over 5,4 and 3 years:
| DSP Midcap Fund – Direct Plan-Growth |
| L&T Mid Cap Fund-Direct Plan-Growth |
| Kotak Emerging Equity Scheme – Growth – Direct |
Even if we consider trailing returns, only 10 out of 23 midcap funds have managed to outperform Nifty Next 50 TRI. That is, get a less negative return.
What do these results mean? Please do not rush to invest in these funds! These results only reiterate what we have been saying for a while: Those who want midcap (or small cap) exposure need not look beyond Nifty Next 50 passive funds. See: Combine Nifty and Nifty Next 50 funds to create large, mid cap index portfolios and What is the best way to invest in Nifty Next 50 Index? and ICICI Nifty Next 50 Index Fund vs Reliance ETF Junior BeEs
Investors are better off with a Nifty Next 50 index fund than a Nifty Midcap 150 index fund or active midcap funds since it is impossible to predict which active fund would outdo NN50 in future.
We now publish both equity fund and debt fund (+ hybrid fund) screeners each month!
Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video! ⇐ More than 415 investors and advisors use this!
Unlock the secrets of successful financial advisors and entrepreneurs with our new course!
My new book for kids: “Chinchu gets a superpower!” is now available!
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 for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Join our courses in exclusive Facebook Groups!
- 550+ members are now part of our new course: How to get people to pay for your skills! (watch 1st lecture for free). 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 how to achieve by showcasing your skills and building a community that trusts you and pays you!
- Goal-based portfolio management! Join 2220+ members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment of Rs. 3000 only. No recurring fees! Life-long access to videos (10+ hours content) in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author
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. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] comAbout freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only 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
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This 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
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, 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 199 (instant download)Free android apps
- All calculators from our book, “You can be Rich Too” are now available on Google Play!
- Install the Financial Freedom App! (Google Play Store)
- Install Freefincal Retirement Planner App! (Google Play Store)
- Find out if you have enough to say "goodbye" to your employer (Google Play Store)