There were around 21 schemes in the mid cap category that completed seven years in the market. Out of these 21 mid cap schemes, 20 schemes have failed to beat their respective benchmarks.In simple words, only one mid cap scheme has managed to beat its benchmark.
Franklin India Prima Fund, the oldest scheme in the mid cap category, failed to beat its respective benchmark in the seven year horizon. The scheme offered 14.96% compared to 20.12% by its benchmark (Nifty Midcap 150 – TRI).
HDFC Mid-Cap Opportunities Fund, the largest scheme in the mid cap category based on assets managed, failed to beat its benchmark. The scheme offered 18.73% compared to 20.12% by its benchmark (Nifty Midcap 150 – TRI). HDFC Mid-Cap Opportunities Fund manages assets of Rs 56,032.98 crore.
Axis Midcap Fund and Nippon India Growth Fund, which manages assets of more than Rs 20,000 crore, failed to beat their respective benchmarks in the seven year horizon.
The mid cap category offered an average return of around 17.10% in a seven 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 18.27%, 20.12%, and 19.84% respectively in a seven year horizon.
Outperformer in the category
Quant Mid Cap Fund (Earlier known as Quant Opportunities Fund) has managed to beat its benchmark in the seven year horizon. The scheme offered 23.76% compared to 20.12% by its benchmark (Nifty Midcap 150 – TRI).
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.
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 mutual funds to invest in 2024
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
