Edelweiss Mid Cap Fund: Rewarding Investors Well for the Risk it Takes

Among the various sub-categories of diversified equity mutual funds, mid cap funds (as well as small cap funds) have been the adored by investors. In August 2025, mid cap funds witnessed the second-highest net inflow of over Rs 53 bn.

The consistent inflows into mid cap funds since the COVID-19 pandemic have come on the back of returns clocked by the Nifty Midcap 150 - Total Return Index (TRI). The 5-year return of this benchmark index for mid cap funds is a respectable 27.9% CAGR.

Some funds in the mid cap category have even outshone the Nifty Midcap 150 -TRI on 5-year returns, i.e. generated alpha. One such fund is the Edelweiss Mid Cap Fund.

In this editorial, we will deep-dive into Edelweiss Mid Cap Fund, a growth-oriented mid cap fund.

Fund Overview

This fund was launched in December 2007 as Edelweiss Mid and Small Cap Fund.

After the mutual fund categorisation and rationalisation norms came into force, it was rechristened and recategorised as Edelweiss Mid Cap Fund in February 2018. Before that, the focus of the scheme was having on-par exposure to midcap and smallcap stocks.

Currently, in line with regulatory guidelines, the fund maintains a minimum exposure of 65% in mid-cap stocks, i.e. classified as companies between 101 to 250 based on market capitalisation.

Other than that, it invests up to 35% of its total assets in companies other than midcaps.

It holds the mandate to invest up to 50% of its assets in equity derivatives for hedging and non-hedging purposes. It may also invest up to 35% of its assets in debt & money market instruments.

The fund has demonstrated a credible and appealing performance since its launch, having outperformed the benchmark and the category average.

The Assets Under Management (AUM) of the fund is over Rs 117 billion (bn).

The fund has been managed by been co-managed by Trideep Bhattacharya (since October 2021), Dhruv Bhatia (since October 2024), and Raj Koradia (since July 2024).

Before that, Harsh Patwardhan and Sahil Shah managed the fund.

Edelweiss Mid Cap Fund - Snapshot

Source: ACE MF

Investment Strategy

Edelweiss Mid Cap Fund is known for its growth-oriented strategy, while for its stock-picking, it follows a bottom-up approach to invest in midcap stocks for the long term.

It invests in quality businesses that promise good earnings growth opportunities, profitable products and services and are run by good management. There is no bias towards any particular sector.

The fund uses its internal F.A.I.R. investment framework to screen stocks wherein it looks at...

• Forensic - checking accounting quality, board governance standards and ownership background.
• Acceptable price - reasonably priced businesses with earnings power over the medium term, rather than focusing on the short term.
• Investment Style Agnostic - focusing on strong businesses capable of delivering long-term returns, while remaining agnostic to value or growth investing styles.
• Robustness - picking well-managed businesses that have scalable opportunities and superior return on capital employed.

The strategy followed is to identify companies early on which have the potential to scale up significantly to become materially larger in the medium to long term.

As mentioned earlier, the fund also takes exposure to derivatives for purposes of hedging, portfolio balancing and optimising returns.

The fund endeavours to remain fully invested and avoids timing the market. That said, the fund focuses on liquidity of the portfolio to withstand market fluctuations and redemption pressures.

Portfolio

Edelweiss Mid Cap Fund usually holds a well-diversified portfolio of 75-85 stocks.

As per the August 2025 portfolio, the fund has 85 stocks, of which over 66% are midcaps, about 18% largecaps, and 12% smallcaps.

The fund is fully invested, as it holds only around 2.6% in cash & cash equivalents.

The top 10 stocks are 25% of the total portfolio, making it well-diversified, and include names such as Persistent Systems (3.1%), Max Healthcare Institute (3%), Coforge (2.9%), etc.

Among the various sectors, the top 3 sectors of the fund are finance (14.6%), auto & ancillaries (10.8%), and healthcare (10.7%), comprising 36% of the portfolio.

The portfolio is well-distributed across cyclical and defensive sectors, helping to cushion the impact of market corrections and sustain performance through varying market phases.

The fund buys stock with a long-term view and holds it with conviction, and this is reflected in the low portfolio turnover, which has been in the range of 43-52% in the last one year.

Historical Returns

This diversified approach and with an ingenious investment strategy, has helped the fund to deliver appealing returns for its investors.

It is among the top performers in its category and has outperformed many of its category peers and benchmark, i.e. the Nifty Midcap 150 - TRI, over longer periods.

As of 7 October 2025, the compounding annualised rolling returns over the last 3 years and 5 years are 26.7% and 32.4%, respectively, which are noticeably higher than the category average returns and its benchmark, the Nifty Midcap 150 - TRI.

Edelweiss Mid Cap Fund - Performance

Source: ACE MF

Risk Profile

To deliver appealing returns, Edelweiss Mid Cap Fund has exposed its investors to slightly higher risk (standard deviation of 15.78) than the category average and the Nifty Midcap 150 - TRI.

However, when evaluated on a risk-adjusted basis, the fund has rewarded investors handsomely as reflected by the sharpe and sortino ratios of 0.35 and 0.7, respectively.

The sharpe ratio of the fund, which measures upside and downside volatility, is the same as the category average, but higher than Nifty Midcap 150 - TRI.

On sortino ratio, which focuses on the downside volatility, the fund has better than the category average as well as its benchmark.

It can be said that Edelweiss Mid Cap Fund has justified the risk well with the returns delivered. It is a decent risk-reward contender.

Conclusion

Edelweiss Mid Cap Fund, with its relatively medium-sized AUM, has the potential to capitalise on the market opportunities better compared to giant-sized schemes in the category.

It comes from a fund house following robust investment processes and systems. The investment style and approach have so far resulted in decent rewards for its investors.

That said, keep in mind that the risk fund takes is high.

In general, too, mid cap funds are placed at the higher end of risk risk-return spectrum. Simply put, they carry high risk.

You may consider them only if you have a high-risk appetite and investment horizon of 5-7 years, and in the satellite portion of the mutual fund portfolio. Avoid going overboard when investing in midcaps, particularly when valuations are looking expensive.

Be a thoughtful investor.

Happy investing.

#Table 2 Note: Data as of 7 October 2025
Rolling period returns are calculated using the Direct Plan-Growth option. Returns over 1 year are compounded annualised.
Standard Deviation indicates total risk, while the Sharpe Ratio and Sortino Ratio measure the Risk-Adjusted Return. They are calculated over 3 years, assuming a risk-free rate of 6% p.a.
*All mid cap mutual fund schemes are considered to compute the category average returns.
Please note that this table represents past performance. Past performance is not an indicator of future returns.
The securities quoted are for illustration only and are not recommendatory.
Speak to your investment advisor for further assistance before investing.Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.

Disclaimer: This write-up is for information purposes and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully. Registration granted by SEBI, enlistment as IA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.