5 Top Performing Mid Cap Mutual Funds of 2024 in India Over the Last 5 Years

As India continues to be one of the fastest-growing economies in the world, supported by government spending and robust performance in the manufacturing and infrastructure sectors, mid-cap stocks have benefitted immensely. Notably, stocks belonging to lower market caps tend to outperform their large-cap peers during phases of secular bull run and robust economic growth, as these companies are usually in their growth phase, giving them higher upside potential.

The influx of new retail investors entering the market in recent years and the growing popularity of the systematic investment plan (SIP) of mutual funds are also the key reasons behind the sustained rally in the mid-cap segment.

As mid-cap stocks shined in recent years, Mid Cap Funds too outperformed their Large Cap Fund peers. Out of the 22 Mid Cap Funds in India that have a track record of 5 years or more, 14 schemes delivered returns at a CAGR of 20% or more on a 5-year rolling return basis. The top-performing Mid Cap Fund generated a CAGR of 28.9% during this period.

In this article, explore the top-performing Mid Cap Mutual Funds of 2024 in India in the last 5 years.

Top-performing Mid Cap Fund of 2024 #1: Quant Mid Cap Fund

Launched in February 2001, Quant Mid Cap Fund is an agile scheme in the Mid Cap Fund category. The fund is quick in its approach to shifting allocation between market caps and sectors, though it maintains a mid-cap biased portfolio. Accordingly, the fund has recorded a high portfolio churn of 100-340% in the last one year. Despite its aggressive approach, Quant Midcap Fund has proved its ability to limit downside risk during depressed market conditions and rewarded investors over complete market cycles. In the last five years, Quant Midcap Fund has rewarded investors with high alpha with returns of 28.9% CAGR on a rolling returns basis against 21.8% CAGR registered by its benchmark Nifty Midcap 150 - TRI.

Reliance Industries is currently the fund's top stock holding, followed by mid-cap names such as Aurobindo Pharma, Container Corporation of India, Samvardhana Motherson International, Linde India, and SAIL. In terms of sector, it currently favours Healthcare, Auto & Ancillaries, Power, Crude Oil, Logistics, and Finance, among others.

Top-performing Mid Cap Fund of 2024 #2: PGIM India Midcap Opportunities Fund

Launched in December 2013, PGIM India Midcap Opportunities Fund is a Mid Cap Fund that remained among the underperformers during its initial year of launch. However, with a focus on high-quality stocks, it recorded a major breakthrough during the 2020 market crash as well as the ensuing recovery/bull phase, wherein it generated remarkable alpha over the benchmark and outpaced many of its peers. The fund is benchmark agnostic; the investments are typically made at the conviction of the fund manager, irrespective of their weightage in the index. PGIM India Midcap Opportunities Fund follows an active investment strategy and has a penchant for churning out a major portion of its portfolio. However, it has shown a lot of patience with many of its quality stocks and sectorial bets, which have paid off its investors in due course.

The fund currently holds higher exposure to popular mid-cap names such as Dixon Technologies, Max Healthcare Institute, The Phoenix Mills, Timken India, and UNO Minda. Sector-wise, the fund's portfolio comprises a mix of cyclicals and defensives such as Auto & Ancillaries, Finance, Healthcare, Infotech, Chemicals, and Consumer Durables.

Top-performing Mid Cap Fund of 2024 #3: Motilal Oswal Midcap Fund

Launched in February 2014, Motilal Oswal Mid Cap Fund aims to invest in quality businesses with reasonable long-term growth potential and are available at a fair price. The scheme follows an active investment style and its portfolio turnover usually ranges between 130-150%, signifying higher portfolio churning. It seeks to invest in midcap companies with a strong competitive position or economic moat, good business prospects, and run by a competent management team. While the fund has occasionally outperformed the benchmark and category average during various market phases in the past, it has emerged as a top performer in the category over long-term time frames.

The fund's top holdings comprise a mix of large and mid-cap names such as JIO Financial Services, Vodafone Idea, Zomato, Tube Investments of India, and Kalyan Jewellers. In terms of sector, the fund prefers Infotech, Auto & Ancillaries, Finance, Telecom, and Retail, among others.

Top-performing Mid Cap Fund of 2024 #4: Mahindra Manulife Mid Cap Fund

Launched in January 2018, Mahindra Maulife Mid Cap Fund focuses on creating a well-diversified portfolio by following an active management style. It follows a 'bottom-up' approach to pick stocks across the sectors. While picking stock the fund focuses on identifying companies which can grow to become the next leaders in their segment. The fund occasionally churns a portion of its portfolio to capitalise on market opportunities and has recorded a moderate turnover of 90-100%. Notably, the fund usually caps the allocation in each stock to under 5%. The fund limited the downside risk better compared to the benchmark and the category average in the 2020 market crash and it also stands among the above-average performers in the current bull phase. This has resulted in superior returns for the fund across time frames.

The fund's top holdings include Indus Towers, Hero MotoCorp, Indian Bank, REC, and Persistent Systems. In terms of sector, the fund's portfolio is skewed towards Banking & Finance, Auto & Ancillaries, Healthcare, Engineering, Chemicals, and Telecom, among others.

Top-performing Mid Cap Fund of 2024 #5: 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. The fund avoids investing in momentum-driven bets and instead focuses on quality stocks available at reasonable valuations and holds them with a long-term view. It aims to identify emerging/niche trends and scalable businesses to generate high alpha by following the bottom-up stock selection. The fund invests about 30% of its assets in stocks of large-cap and small-cap companies for diversification. While in the past the fund often trailed the category average and the benchmark, its performance over the last few years has been commendable. It now stands among the top quartile performers in the category across time frames and is much ahead of the benchmark.

The fund's prominent holdings include Power Finance Corporation, Cholamandalam Investment & Finance Company, Supreme Industries, Fortis Healthcare, and Voltas. In terms of sector, its portfolio is inclined towards Banking & Finance, followed by Auto & Auto Ancillaries, Healthcare, Infotech, Engineering, and Retail, among others.

To conclude...

Mid Cap Funds have the potential to reap high returns at a lower risk compared to Small Cap Funds. However, these funds are inherently more volatile than Large Cap Funds, making them suitable only for investors with a high risk appetite.

Moreover, due to a sharp rally in the mid-cap segment in recent years, valuations appear to have stretched, indicating a potential bubble. Thus, one should avoid investing in Mid Cap Funds with a short-term view as the margin of safety seems to be narrow.

It is also worth remembering that no two Mid Cap Funds are alike. Each scheme has a different risk-reward matrix depending on the investment strategy that it follows, as well as the composition of the underlying portfolio.

Thus, when investing in Mid Cap Funds it is better to avoid chasing returns and instead consider schemes that prefer holding quality stocks in the portfolio. Also ensure that the scheme you choose aligns with your investment objectives, time horizon to goal, and risk appetite.

Watch this video to find out how to approach investment in Mid Cap Funds:

Note: This write up is for information purpose 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, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.