We have compared the performance of these schemes with their current benchmarks. These schemes are benchmarked against total return index (TRI) currently. Earlier schemes used to use benchmarks convenient to them. Sebi launched TRI based benchmarks in February 2018. Many mutual fund analysts feared that actively managed schemes will struggle to beat TRI based benchmarks.
There were around 18 mid cap schemes that have completed 10 years in the market and 15 schemes failed to beat their respective benchmarks. In other words, only three schemes managed to outperform their respective benchmarks in 10 years.
Franklin India Prima Fund, the oldest scheme in the category, underperformed its benchmark in 10 years. The scheme has completed around 30 years in the market. Axis Midcap Fund, which manages assets of more than Rs 20,000 crore, failed to beat its benchmark in the 10-year horizon.
DSP Midcap Fund, which manages more than Rs 13,000 crore AUM, also failed to outperform its benchmark during the same time period.
The mid cap category has offered an average return of around 20.31% in the 10-year horizon. The mid cap schemes are benchmarked against Nifty Midcap 100 – TRI, Nifty Midcap 150 – TRI, and S&P BSE 150 MidCap – TRI. Nifty Midcap 100 – TRI, Nifty Midcap 150 – TRI, and S&P BSE 150 MidCap – TRI offered 20.11%, 21.77%, and 21.62% respectively.
Outperformers in the category
HDFC Mid-Cap Opportunities Fund and Kotak Emerging Equity Fund, the two of the largest schemes in the mid cap category based on assets managed, have managed to beat their respective benchmarks.
HDFC Mid-Cap Opportunities Fund and Kotak Emerging Equity Fund are benchmarked against Nifty Midcap 150 – TRI. The schemes offered 22.08% and 22.85% respectively against 21.77% by the benchmark.
Edelweiss Mid Cap Fund, which manages assets of more than Rs 3,000 crore, managed to beat its benchmark. The scheme offered 22.38% against 21.77% by the benchmark (Nifty Midcap 150 – TRI).
We considered regular and growth options of schemes for the study.
Note, this exercise is not a recommendation. This exercise is just to find out how many mid cap schemes underperformed against their benchmarks. One should not invest or redeem their investments based on this exercise.
One should always consider their investment horizon, risk appetite, and goals before making investments.
Mid cap schemes are usually recommended to aggressive investors who have a very high-risk tolerance and longer investment horizon of, say, seven to 10 years. A longer investment horizon helps investors to navigate the volatility better.
If you are looking for recommendations, see:
Best mid cap schemes to invest in 2023
