Midcap funds have quietly delivered strong returns over the last five years, outperforming most key equity fund categories, barring small-cap funds. While large-cap funds grabbed attention for stability and small-caps for sharp rallies, midcaps struck a balance between growth and risk.
Three schemes — Motilal Oswal Midcap Fund, HDFC Mid Cap Fund and Nippon India Growth Mid Cap Fund — have emerged as top performers on the 5-year return chart, comfortably beating their benchmark and category average.
Over the last five years:
Motilal Oswal Midcap Fund – Direct Plan – Growth: 24.70% CAGR
HDFC Mid Cap Fund – Direct Plan – Growth: 23.80% CAGR
Nippon India Growth Mid Cap Fund – Direct Plan – Growth: 23.56% CAGR
In comparison, the benchmark NIFTY Midcap 150 TRI delivered 20.26% CAGR, while the midcap category average stood at 19.98% CAGR.
Lump sum & SIP: How Rs 1 lakh and Rs 10,000 per month grew
Motilal Oswal Midcap Fund
Rs 1 lakh invested 5 years ago → Rs 3.01 lakh
Rs 10,000 monthly SIP → Rs 9.88 lakh
SIP CAGR: 20.04%
HDFC Mid Cap Fund
Rs 1 lakh invested 5 years ago → Rs 2.91 lakh
Rs 10,000 monthly SIP → Rs 10.38 lakh
SIP CAGR: 22.40%
Nippon India Growth Mid Cap Fund
Rs 1 lakh invested 5 years ago → Rs 2.88 lakh
Rs 10,000 monthly SIP → Rs 10.28 lakh
SIP CAGR: 21.97%
While Motilal Oswal leads in lump sum returns, HDFC Mid Cap and Nippon India show slightly stronger SIP performance.
Risk & volatility: Returns don’t come easy
All three funds are classified as Very High Risk, which is typical for midcap funds.
Motilal Oswal Midcap Fund (Direct)
Standard Deviation: 18.56% (higher volatility)
Sharpe Ratio: 0.92
Beta: 0.96
This fund has shown strong returns but with relatively higher volatility.
HDFC Mid Cap Fund
Standard Deviation: 13.87% (lower among the three)
Sharpe Ratio: 1.27 (strong risk-adjusted returns)
Beta: 0.85 (less volatile than benchmark)
HDFC appears relatively more stable with better risk-adjusted metrics.
Nippon India Growth Mid Cap Fund (Direct)
Standard Deviation: 15.42%
Sharpe Ratio: 1.18
Beta: 0.95
Nippon balances return and risk effectively with healthy alpha generation.
Portfolio positioning: Where are they investing?
Motilal Oswal Midcap Fund
Heavy tilt towards Technology (36.34%)
Financials (22.17%)
Industrials and Consumer Discretionary also meaningful
This is a more concentrated bet on technology-driven growth.
HDFC Mid Cap Fund
Financials (28.17%) form the core
Balanced exposure across Healthcare, Consumer, Technology and Staples
The portfolio appears more diversified across sectors.
Nippon India Growth Mid Cap Fund
Financials (27.01%) and Industrials (18.36%) dominate
Meaningful allocation to Consumer Discretionary and Healthcare
This fund blends cyclical and growth-oriented sectors.
Why midcap funds have done well
Midcap companies are often in a high-growth phase. They are larger and more established than small-caps but still have room to expand faster than large companies. Over the last five years, strong earnings growth, improving balance sheets and domestic economic recovery have supported midcap performance.
Advantages of investing in midcap funds
-Higher growth potential than large-caps
-Better scalability compared to small-caps
-Can enhance long-term portfolio returns
-Ideal for wealth creation over 5–10 years
But here’s the caution
Midcap funds can fall sharply during market corrections. They tend to:
-Correct more than large-caps in downturns
-Show higher volatility
-Test investor patience in short-term phases
-Past 5-year returns look attractive, but such performance may not repeat every cycle. Investors should not chase returns blindly.
Who should invest?
Midcap funds are suitable for investors with 5–10 year investment horizon, those comfortable with market volatility and investors looking to boost long-term portfolio returns. They are also suitable for SIP investors who can average out market fluctuations. Conservative investors or those with short-term goals should avoid high allocation to midcaps.
Summing up…
Motilal Oswal, HDFC and Nippon India have all delivered strong 5-year performance, beating the benchmark and category average. However, the choice should not be based on returns alone. Risk profile, portfolio positioning and your own investment horizon matter equally. Midcaps can create wealth — but only for investors who stay disciplined through market ups and downs.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.