Best Mid Cap Mutual Funds: Motilal Oswal Midcap Fund vs. Nippon India Growth Fund
Mitali Dhoke
Dec 13, 2024 / Reading Time: Approx. 15 mins
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The Indian midcap segment has emerged as a dynamic and promising area within the equity markets, capturing significant investor attention in 2024. This segment is characterized by companies in their growth phase, offering a unique blend of stability and the ability to scale significantly in the future. As of now, midcaps remain a vital driver of India's economic growth, benefiting from a conducive macroeconomic environment and rising domestic demand.
The midcap space thrives on its ability to combine innovation, agility, and market responsiveness. Many companies in this segment are leaders in niche markets or are rapidly scaling to compete with large-cap giants.
India's economic fundamentals remain strong and government initiatives supporting sectors like manufacturing, technology, and infrastructure, exhibits that midcap companies are well-positioned to capitalize on the growth opportunities. Their ability to deliver higher earnings growth compared to large caps has also solidified their appeal among investors.
[Read: Highest Returns Mutual Fund in the Last 10 Years - Mid Cap Fund Category]
With the Nifty Midcap 150 Index delivering robust returns and consistently outperforming its large-cap counterparts, midcap stocks have become a favourite for investors seeking higher growth potential.
Graph: The Mid-Cap Segment has Experienced Remarkable Growth in Recent Years
Data as of December 12, 2024
Do note past performance is not an indicator of future returns
The securities quoted are for illustration only and are not recommendatory.
(Source: ACE MF, data collated by PersonalFN Research)
Midcap mutual funds have consistently proven to be wealth creators for long-term investors. Over the past few years, these funds have delivered impressive returns, particularly during bullish market cycles.
The future of the Indian midcap segment looks promising, with analysts predicting sustained growth fueled by economic recovery, favourable policies, and continued innovation. As companies in this segment expand their market share and improve operational efficiencies, midcap funds are expected to deliver strong returns over the next few years.
However, investors must remain cautious of potential market volatility and adopt a disciplined approach to investing. By focusing on funds with strong management and a proven track record, investors can make the most of the opportunities this vibrant segment has to offer.
Remember that no market cap can turn out to be a consistent winner every year. Sometimes large caps outperform, and other times it could be small caps. Investors in the mid-cap market may experience short-term losses if the cycle reverses.
Therefore, it would be prudent to avoid short-term bets while investing in mid-cap funds and maintain a long-term perspective. Choosing the right mid-cap fund requires understanding a scheme's approach, risk profile, and how it aligns with your investment goals.
Note: In my previous mutual fund comparison report, I have given a comprehensive analysis of the few top performing mid-cap mutual funds. You may consider reading -
In this article, the analysis compares Motilal Oswal Midcap Fund and Nippon India Growth Fund across key parameters to help you decide which mid-cap mutual fund is suitable for you.
# - Motilal Oswal Midcap Fund
Motilal Oswal Midcap Fund is an open-ended equity scheme that belongs to Motilal Oswal Mutual Fund. It is a well-established mid-cap mutual fund launched in February 2014 and currently has an AUM of Rs 22,897.62 crores (as of Nov 30, 2024).
The scheme aims to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio of mid-cap companies. Motilal Oswal Midcap Fund emphasizes long-term wealth creation through patient holding of well-researched stocks. The Scheme is benchmarked against Nifty Midcap 150 - TRI as a primary index.
# - Nippon India Growth Fund
Nippon India Growth Fund is an open-ended equity scheme and belongs to Nippon India Mutual Fund. It is a well-established mid-cap mutual fund scheme launched in October 1995 and currently has an AUM of Rs 34,583.63 crores (as of Nov 30, 2024).
The fund aims to invest in equity and equity related securities through a research based investment approach. Nippon India Growth Fund identifies midcap companies with strong growth trajectories and leverages diversification to manage risk. The scheme is benchmarked against Nifty Midcap 150 - TRI as a primary index.
Investment Style and Philosophy:
- Motilal Oswal Midcap Fund operates on the 'Buy Right, Sit Tight' investment philosophy. This means the fund focuses on selecting high-quality stocks and holding them for the long term to maximize compounding returns.
The fund typically invests in mid-cap companies with high growth potential. A limited number of stocks are chosen, reflecting the fund's high conviction in its picks. Following a bottom-up approach stocks are selected based on company fundamentals rather than macroeconomic or sector trends.
- Nippon India Growth Fund believes in capitalizing on India's mid-cap growth story by identifying companies with the potential to become future market leaders. The fund invests in a broad range of mid-cap companies across various sectors to reduce concentration risk.
It prioritizes companies with a track record of profitability and scalability. Blend of top-down and bottom-up approach while macroeconomic factors are considered, the focus is on stock-specific opportunities. The portfolio is actively managed to adjust to changing market dynamics while maintaining a growth-oriented tilt.
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Performance Comparison: Rolling Returns
Data as of December 12, 2024
Do note past performance is not an indicator of future returns
The securities quoted are for illustration only and are not recommendatory.
(Source: ACE MF, data collated by PersonalFN Research)
Both Motilal Oswal Midcap Fund and Nippon India Growth Fund have delivered impressive returns over different time horizons, significantly outperforming the category average and benchmark index in most periods.
In the short term, Motilal Oswal Midcap Fund has delivered exceptional returns, significantly outpacing Nippon India Growth Fund's return. Over a 3-year period, the Motilal Oswal scheme again leads with a 37.09% CAGR, compared to Nippon India Growth Fund's 29.23% CAGR, showcasing its ability to capitalize on recent market opportunities more effectively.
[Read: 5 Best Mid Cap Funds for 2024: Top Performing Mid Cap Mutual Funds in India]
In the long-term, both funds maintain robust performances. Motilal Oswal Midcap Fund achieved a 23.03% CAGR, while Nippon India Growth Fund posted a 20.80% CAGR. Though strong, its returns lag behind Motilal Oswal Midcap Fund, indicating a relatively less aggressive growth trajectory. On the contrary consistency of Motilal Oswal's returns over a decade makes it a solid contender for long-term wealth creation.
Comparing these funds against the Nifty Midcap 150 TRI benchmark and the mid-cap category average reveals that both schemes have demonstrated consistent alpha generation. However, while both funds have proven their mettle across time frames, Motilal Oswal's stronger performance across various periods sets it apart as a more aggressive growth-focused option. Nippon India Growth Fund, while slightly lagging, has still delivered above-average returns and might appeal to investors looking for relatively stable growth.
Mid-cap stocks are inherently more volatile, meaning their prices can fluctuate significantly. This volatility can lead to both higher potential returns and potential losses. Investors should align their choice with their risk appetite, investment horizon, and financial goals.
Portfolio Composition: Asset Allocation of Schemes
Both Motilal Oswal Midcap Fund and Nippon India Growth Fund are popular amongst investors in the mid-cap segment, but their asset allocation strategies differ slightly.
Scheme Name |
Mid Cap % |
Large Cap % |
Small Cap % |
Motilal Oswal Midcap Fund |
66.76 |
31.34 |
1.28 |
Nippon India Growth Fund |
65.89 |
17.12 |
12.58 |
Data as of November 30, 2024
Do note past performance is not an indicator of future returns
The securities quoted are for illustration only and are not recommendatory.
(Source: ACE MF, data collated by PersonalFN Research)
Both funds exhibit a strong inclination toward mid-cap stocks, with Motilal Oswal Midcap Fund allocating 66.76% and Nippon India Growth Fund slightly lower at 65.89%. This alignment underscores their commitment to providing substantial exposure to mid-cap companies, which are often seen as growth-oriented businesses with potential for higher returns.
However, the slightly higher allocation in Motilal Oswal suggests a more focused strategy on mid-cap dominance, positioning it as a choice for investors looking for concentrated mid-cap exposure. The allocation to large-cap stocks shows a stark contrast between the two funds. Motilal Oswal Midcap Fund invests 31.34% in large-cap stocks, providing a layer of stability and lower volatility to its portfolio.
In comparison, Nippon India Growth Fund allocates only 17.12% to large-cap companies, emphasizing its tilt toward smaller and potentially higher-growth opportunities. The scheme allocates a considerable 12.58% to small-cap stocks, showcasing its intent to tap into emerging and potentially high-growth companies.
Conversely, Motilal Oswal Midcap Fund has a minimal small-cap exposure of 1.28%, suggesting a cautious approach toward high-risk, high-reward investments. This aspect makes Nippon India Growth Fund more suitable for investors with a higher risk appetite aiming for long-term capital appreciation through a broader market exposure.
Motilal Oswal Midcap Fund may appeal to those who prefer a balanced approach with reduced volatility, while Nippon India Growth Fund is better aligned with aggressive investors willing to endure short-term volatility for the potential of higher long-term returns.
Both funds leverage their mid-cap focus effectively, but their divergent strategies in large-cap and small-cap allocations make them unique offerings within the mid-cap category.
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Market Volatility: Risk Profile of Schemes
The equity market experiences constant ups and downs, and mid-cap funds are particularly susceptible to these fluctuations. Consequently, mid-cap funds carry a higher risk profile compared to large-cap funds.
Risk Ratio (3 years) |
Motilal Oswal Midcap Fund |
Nippon India Growth Fund |
Standard Deviation |
16.83 |
15.88 |
Sharpe Ratio |
0.46 |
0.35 |
Sortino Ratio |
1.02 |
0.73 |
Data as of December 12, 2024
Do note past performance is not an indicator of future returns
The securities quoted are for illustration only and are not recommendatory.
(Source: ACE MF, data collated by PersonalFN Research)
Motilal Oswal Midcap Fund has a Standard Deviation of 16.83, slightly higher than Nippon India Growth Fund's 15.88. This indicates that Motilal Oswal exhibits greater fluctuations in returns, making it relatively riskier. However, this higher risk may also mean greater potential for higher returns, which is often characteristic of mid-cap funds.
Motilal Oswal Midcap Fund has a Sharpe Ratio of 0.46, outperforming Nippon India Growth Fund's 0.35. This suggests that for every unit of risk, Motilal Oswal has provided higher returns, making it a more attractive option for investors willing to accept its slightly higher volatility.
In case of Sortino Ratio, Motilal Oswal Midcap Fund stands at 1.02, compared to Nippon India Growth Fund's 0.73. This indicates that Motilal Oswal has been more effective in generating returns while minimizing downside risks. Investors prioritizing protection against losses may favour Motilal Oswal based on this metric.
[Read: AMFI Issues New Risk Disclosure Guidelines for Mid-Cap and Small Cap Funds]
Both funds are competitive in the mid-cap category, but Motilal Oswal Midcap Fund emerges as a stronger contender in terms of risk-adjusted returns. Its higher Sharpe and Sortino Ratios imply better performance in managing risks while delivering returns. Conversely, Nippon India Growth Fund's slightly lower Standard Deviation suggests that it is the less volatile of the two, making it suitable for moderately risk-averse investors.
It's crucial to consider other factors beyond these ratios when evaluating a fund's risk profile. One must also consider their risk tolerance and investment goals to determine which fund aligns better with their investment strategy.
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Top Holdings of the Mid-Cap Schemes:
Due to the dynamic nature of mid-cap funds, top holdings can change frequently. However, analysing current holdings can offer insights into the fund manager's investment philosophy.
Motilal Oswal Midcap Fund |
Nippon India Growth Fund |
Company |
% Assets |
Company |
% Assets |
Polycab India Ltd. |
9.96 |
Power Finance Corporation Ltd. |
2.86 |
Coforge Ltd. |
9.86 |
Persistent Systems Ltd. |
2.86 |
Kalyan Jewellers India Ltd. |
9.65 |
Cholamandalam Financial Holdings Ltd. |
2.60 |
Zomato Ltd. |
9.47 |
BSE Ltd. |
2.56 |
Persistent Systems Ltd. |
7.74 |
Fortis Healthcare Ltd. |
2.53 |
Mahindra & Mahindra Ltd. |
6.15 |
The Federal Bank Ltd. |
2.44 |
JIO Financial Services Ltd. |
6.09 |
Voltas Ltd. |
2.40 |
Trent Ltd. |
5.19 |
Varun Beverages Ltd. |
2.26 |
Bajaj Auto Ltd. |
4.44 |
Dixon Technologies (India) Ltd. |
1.97 |
Voltas Ltd. |
3.62 |
Indus Towers Ltd. |
1.82 |
Data as of November 30, 2024
Do note past performance is not an indicator of future returns
The securities quoted are for illustration only and are not recommendatory.
(Source: ACE MF, data collated by PersonalFN Research)
The Motilal Oswal Midcap Fund demonstrates a concentrated investment strategy, with its top ten holdings collectively accounting for a significant share of the portfolio. Leading the pack is Polycab India Ltd. at 9.96%, followed closely by Coforge Ltd. (9.86%) and Kalyan Jewellers India Ltd. (9.65%).
From a sectoral perspective, the fund leans heavily towards IT services, represented by Coforge Ltd. and Persistent Systems Ltd., and consumer-facing businesses like Kalyan Jewellers and Zomato. The presence of companies like Mahindra & Mahindra Ltd. and Bajaj Auto Ltd. highlights the fund's tilt toward established domestic brands in the auto sector, while Trent Ltd. and Voltas Ltd. reflect its exposure to retail and consumer durables.
In contrast, the Nippon India Growth Fund adopts a more diversified approach, with smaller allocations to a broader range of companies. Its largest holding, Power Finance Corporation Ltd., and Persistent Systems Ltd., each contribute only 2.86% of the portfolio. The sectoral allocation indicates a balanced mix of financial services, healthcare, and industrials.
While both funds target midcap growth, their investment strategies differ sharply. The Motilal Oswal Midcap Fund employs a high-concentration approach, betting on select winners to outperform. This strategy involves higher risks but potentially greater returns. On the other hand, the Nippon India Growth Fund focuses on diversification, spreading its risks across a broader array of holdings and sectors, which could provide more stability in volatile markets.
Expense Ratio of the Schemes
When comparing mid-cap funds, the Expense Ratio, which represents the annual fee charged, plays a crucial role in determining your returns. Here's a quick breakdown of Motilal Oswal Midcap Fund vs Nippon India Growth Fund:
Scheme Name |
Direct Plan Expense Ratio |
Regular Plan Expense Ratio |
Motilal Oswal Midcap Fund |
0.57% |
1.62% |
Nippon India Growth Fund |
0.79% |
1.59% |
Data as of November 30, 2024
Do note past performance is not an indicator of future returns
The securities quoted are for illustration only and are not recommendatory.
(Source: ACE MF, data collated by PersonalFN Research)
Motilal Oswal Midcap Fund offers a higher expense ratio in the regular plan, indicating lower net returns for investors compared to Nippon India Growth Fund. Whereas, under direct plan Motilal Oswal Midcap Fund offers a cost advantage to investors with lower expense ratio at 0.57% as compared to Nippon's.
While the Nippon India Growth Fund has a slightly higher expense ratio, the difference is minimal. Remember, a lower expense ratio translates to potentially higher returns over time, but your decision may not rely based only on expense ratio do consider other qualitative & quantitative factors.
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Suitability of Investors to the Schemes:
Motilal Oswal Midcap Fund could be beneficial for investors looking at a more focused exposure to mid-cap companies with strong fundamentals. However, the fund's concentrated nature may lead to higher risks during market downturns, making it suitable for investors with a high-risk appetite and a long-term investment horizon.
Nippon India Growth Fund is better suited for moderately aggressive investors who prefer broader diversification to mitigate risk while still targeting significant growth potential. Its historical performance showcases its ability to deliver consistent returns across market cycles.
Mid-cap funds are inherently more volatile than large-cap funds but less risky than small-cap funds. Investors in both schemes should be prepared for periods of underperformance during market downturns, as mid-cap stocks are more sensitive to economic conditions.
Motilal Oswal Midcap Fund may appeal to those confident in the fund manager's stock-picking skills and willing to endure higher volatility for potentially higher alpha. Nippon India Growth Fund, with its diversified strategy, offers relatively more stability, making it a prudent choice for investors who seek growth with a slightly lower risk profile.
[Read: 3 Best Large & Midcap Funds for 2025 - Top Performing Large & Midcap Mutual Funds in India]
To summarise...
The mid-cap segment in India holds immense potential as the country's economy grows and moves toward becoming a global hub for innovation, manufacturing, and services. However, the segment is also prone to higher volatility, especially during economic slowdowns or market corrections, requiring investors to have a strong risk appetite and a long-term horizon.
For investors, mid-cap funds like Motilal Oswal Midcap Fund and Nippon India Growth Fund can be an excellent addition to a diversified portfolio. However, these should ideally complement a core portfolio of large-cap funds to balance risk. Investors with a high-risk tolerance and a focus on maximizing long-term growth may prefer mid-cap funds as a part of their satellite strategy.
Ultimately, the best choice depends on your suitability, it is essential to align investments with personal financial goals, regularly monitor the performance, and be patient during periods of market turbulence.
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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
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.