Midcap mutual funds have delivered strong returns over the past five years, outperforming not just their benchmark indices but also large-cap and small-cap categories in many cases. According to the latest performance data, 11 midcap mutual funds of the 33 active funds in the category managed to beat their benchmark indices during the last five years.
Among the 11 midcap schemes that beat their benchmark indices over the past five years, Motilal Oswal Midcap Fund delivered the highest returns with a CAGR of 23.62 per cent, according to Association of Mutual Funds in India (Amfi). Nippon India Growth Midcap Fund came next with annualised returns of 22.48 per cent, followed by Invesco India Mid Cap Fund at 21.87 per cent.
Other funds on the list were Edelweiss Mid Cap Fund, HDFC Mid Cap Fund, ICICI Prudential Mid Cap Fund, Mahindra Manulife Mid Cap Fund, HSBC Mid Cap Fund, Sundaram Mid Cap Fund, Kotak Midcap Fund, and Union Midcap Fund.
Most of these schemes are benchmarked against the Nifty Midcap 150 TRI. Only the Invesco India Mid Cap Fund and the Union Midcap Fund use the BSE Midcap 150 TRI as their benchmark.
Over the past five years, Nifty Midcap 150 TRI delivered annualised returns of 19.49 per cent, while BSE Midcap 150 TRI gave 18.47 per cent returns.
While all the funds mentioned above managed to outperform their benchmark indices during the five-year period, only four of these schemes were able to beat the midcap category average return of 21.50 per cent over the said period.
Midcaps Outperformed Largecaps And Smallcaps
Market data from the past five years shows that midcap stocks delivered better returns than both large-cap and small-cap segments.
During this period, Nifty Midcap 150 rose around 137 per cent, while BSE 250 Midcap gained nearly 122 per cent. In comparison, Nifty Smallcap 250 delivered returns of 114.62 per cent and BSE 250 Smallcap rose 106.60 per cent.
Large-cap indices gave relatively lower returns. Nifty 100 gained 61.44 per cent, while BSE 100 rose 63.43 per cent over the same period.
Historically, too, midcaps have often delivered higher returns than largecaps and smallcaps over the long term.
How Much Would Rs 10 Lakh Have Become
If an investor had invested Rs 10 lakh as a lump sum in Motilal Oswal Midcap Fund five years ago, the investment would have grown to nearly Rs 28.9 lakh today at a CAGR of 23.62 per cent.
What If You Had Done A SIP
A monthly systematic investment plan (SIP) of Rs 10,000 in the same fund for five years would mean a total investment of Rs 6 lakh. At the fund’s five-year return rate, the SIP corpus would now be worth around Rs 10.8 lakh.
Should You Invest In Midcap Funds
Midcap funds have delivered strong returns over the years, but they are also more volatile than large-cap funds.
Experts generally recommend midcap funds for investors who have a long investment horizon and are comfortable taking higher risk. Instead of selecting a fund only based on recent returns, investors should look at factors such as consistency of performance, portfolio quality, risk management, and whether the scheme matches their financial goals and risk appetite. Investors should also consult a financial advisor before making investment decisions.
