Top Performing Midcap Mutual Funds in India

In the last one year, the Nifty Midcap 150 index has gained 8%.

This compares favourably to just 0.2% gains in Nifty Smallcap 250 index.

However, it has underperformed the Nifty 50 index which gained 9.5%, as of 7 May 2025.

We believe, midcap funds offer an attractive investment proposition.

This is because these funds invest in fast growing, mid-sized companies that have the potential to become bluechips of tomorrow.

This gives them high upside potential at a relatively lower risk compared to smallcap funds.

In today's article, we look at the 5 top-performing midcap funds.

We have shortlisted them using a combination of 5-year rolling returns and the information ratio.

#1 HDFC Mid-Cap Opportunities Fund

Launched in June 2007, HDFC Mid-Cap Opportunities Fund has firmly established its position in the Mid Cap Fund category.

It has delivered above-average returns across diverse market conditions. It has consistently positioned itself in the top-quartile performers over extended periods.

The fund has flourished fund manager, Chirag Setalvad. He is known for his strong conviction in mid-cap and small-cap ideas.

On a rolling returns basis in the last 5 years, HDFC Mid-Cap Opportunities Fund grew at a compounded annualised growth rate (CAGR) of 29.7%.

This is compared to a growth of 29% in its benchmark, Nifty Midcap 250 - TRI.

Its information ratio, is 0.25, the highest in the category. To put it in a better perspective, the category average Information ratio is at -0.06.

The fund's emphasis is on identifying long-term growth prospects in fundamentally sound mid-sized stocks. It usually maintains a well-diversified portfolio of high-conviction stocks available at reasonable valuations.

• It's top 3 holdings (as of 30 April 2025) are Max Financial (4.45%), Federal Bank (3.36%), and Balkrishna Industries (3.34%).
• The top 3 sectors (as of 30 April 2025) are auto & auto ancillaries (15.09%), banking (12.96%), and healthcare (10.78%).

Moreover, the fund manager steers clear of chasing market trends. This helps reduce risk while rewarding investors adequately in the long run.

#2 Nippon India Growth Fund

Launched in October 1995, Nippon India Growth Fund is one of the oldest and most popular schemes in the Mid Cap Fund category.

Until 2017, the fund followed a multi-cap strategy, maintaining a balanced exposure across large-cap, mid-cap, and small-cap stocks.

However, after the recategorisation, it now focuses on maintaining a mid-cap biased portfolio.

Nippon India Growth Fund employs the Growth at Reasonable Price (GARP) strategy to identify high-potential stocks and holds them with a long-term perspective.

In the last 5 years, Nippon India Growth Fund grew at an CAGR of 30% on a rolling returns basis. The fund's Information ratio is at 0.23.

• Nippon India Growth Fund has shown its potential to deliver reasonable growth across diverse market phases.
• The fund's top 3 holdings (as of 30 April 2025) are BSE Ltd (3.47%), Cholamandalam Financial Holdings (2.87%), and Fortis Healthcare (2.62%).

The top 3 sectors (as of 30 April 2025) are finance (15.83%), auto and auto ancillaries (12.36%), and healthcare (11.31%).

The fund's predominant allocation to fundamentally sound midcaps, along with some strategic investments in largecaps and smallcaps, has enabled it it to outperform.

#3 Motilal Oswal Midcap Fund

Launched in February 2014, Motilal Oswal Mid Cap Fund aims to invest in quality businesses having reasonable long-term growth potential and are available at a fair price.

Motilal Oswal Mid Cap Fund follows an active investment style. Its portfolio turnover usually ranges between 130-180%, signifying frequent adjustments to the portfolio.

It holds a compact portfolio of about 30-35 stocks to benefit from the high return potential of concentrated bets.

This strategy has enabled the fund to outperform the benchmark and category average during various market phases in the past.

In the last 5 years, Motilal Oswal Midcap Fund's NAV grew at a CAGR of 33.4% on a rolling returns basis. It has an Information ratio of 0.18.

Motilal Oswal Mid Cap Fund churns a substantial portion of its portfolio to capitalise on the various opportunities available in the market.

However, it has shown high conviction with some of its top holdings.

• The fund's top 3 holdings (as of 30 April 2025) are Persistent Systems (10.06%), Coforge (9.47%), and Kalyan Jewellers (8.09%).
• The top 3 sectors (as of 30 April 2025) are IT (25.63%), diamond & jewellery (8.09%), and electricals (7.95%).

The fund's agile and focused investment strategy has resulted in outperformance. It has rewarded investors with superior risk-adjusted return.

#4 Edelweiss Mid Cap Fund

Launched in December 2007, Edelweiss Mid Cap Fund is a growth-oriented Mid Cap Fund.

Prior to 2018, the fund was known as Edelweiss Mid and Small Cap Fund under which it maintained an on-par exposure across mid-cap and small-cap stocks.

After its recategorisation to Mid Cap Funds, it aims to identify strong and quality businesses primarily in the mid-cap space.

Edelweiss Mid Cap Fund has consistently registered above-average growth over the long-term.

In the last 5 years, Edelweiss Mid Cap Fund appreciated at a CAGR of 31.6%. The fund fares reasonably in terms of risk-adjusted returns with an information ratio of 0.18.

The fund aims to achieve growth through a well-diversified portfolio of strong growth companies.

• It's top 3 holdings (as of 30 April 2025) are Dixon Tech (3.51%), Indian Hotels (3.19%), and Max Healthcare (3.18%).
• The top 3 sectors (as of 30 April 2025) are finance (14.32%), healthcare (10.9%), and auto and auto ancillaries (9.52%).

It invests a majority of its stocks with a long-term view to derive the full potential of its holdings.

This strategy has enabled the fund to consistently maintain a decent lead over its peers.

#5 Invesco India Midcap Fund

Launched in April 2007, Invesco India Midcap Fund is a growth-oriented midcap-biased fund that focuses on investing in stocks of high-quality mid-sized companies.

The fund outperformed the benchmark, S&P BSE 150 MidCap - TRI index, and many of its peers during the 2018 midcap crash as well as the 2020 market crash.

It has also managed to outperform the category average in the recent bull market.

Invesco India Mid Cap Fund follows the bottom-up and top-down approach to stock picking with no style bias.

While picking stocks, the fund managers look for stocks of companies with high-growth potential.

In the last 5 years, Invesco India Midcap Fund appreciated at a CAGR of about 29% which is nearly in line with the BSE 150 MidCap - TRI.

The fund's information ratio is 0.14.

Invesco India Midcap Fund has proved its ability to perform well during depressed market conditions.

• The fund's top 3 holdings (as of 30 April 2025) are BSE Ltd (5.53%), L&T Finance (4.58%), and Prestige Estates (4.31%).
• The top 3 sectors (as of 30 April 2025) are finance (19.56%), healthcare (18.64%), and retailing (8.4%).

The focus on fundamentally sound midcaps and prudent stock-picking strategies has helped the fund reward its investors with reasonable risk-adjusted returns over the long run.

Conclusion

Midcap funds have the potential to outperform largecap funds in the long term though they may witness higher volatility as well as downside risk over the short to medium term.

Although midcap funds have high return potential, one should avoid going overboard with investments in the segment.

Instead, aim to create a well-diversified portfolio of equity mutual funds with suitable exposure across sub-categories. It is preferable to have an investment horizon of at least 5-7 years when investing in midcap funds.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a recommendation and should not be treated as such.