Mid-Cap Funds Deliver Up to 26% Returns, Outperform Benchmarks Despite Market Volatility

Mumbai, India: Last week, the Bombay Stock Exchange (BSE) Sensex closed lower for three consecutive days, and the negative trend continued on Monday. Despite this, mid-cap mutual funds have delivered returns that outperform their benchmarks, providing investors with strong long-term gains.

Rising Interest in Mid-Cap Funds
Even during volatile market conditions, investor interest in mid-cap funds has grown steadily. By December 2025, the Assets Under Management (AUM) of mid-cap schemes had nearly 2.5-folded, reaching ₹4.61 lakh crore, up from ₹1.85 lakh crore in December 2022. Mid-cap funds now account for 13% of total equity fund AUM.

This surge is driven by their strong performance: the Nifty Midcap-150 TRI has outperformed Nifty-100 TRI and Nifty Smallcap-250 TRI across one, three, five, and seven-year periods.

Top Performing Funds
Several mid-cap funds have delivered returns of over 26% in the last three years, compared to a 23% return for the benchmark. Mahindra Manulife Mid Cap Fund has particularly outperformed its category and benchmark across medium- and long-term periods. Over three, five, seven, and eight-year horizons, the fund has consistently beaten the Nifty Midcap-150 TRI by at least two percentage points. Other strong performers include Kotak Mid Cap Fund, Axis Mid Cap Fund, and SBI Mid Cap Fund.

SIP Performance
Over the past eight years, Mahindra Manulife’s SIP (XIRR) return has been 22.3%, outperforming peers such as Tata, SBI, Axis, Kotak, Quant, and HSBC mid-cap funds. The Nifty Midcap-150 TRI recorded a 21.1% return during the same period.

Portfolio Insights
As of 30 January 2026, the fund holds a well-diversified portfolio of 61 stocks, with its top 10 holdings constituting about 26% of total holdings. The fund maintains significant exposure to financial services (29%), while also investing in automobiles and auto components, healthcare, and select capital goods. This strategic diversification has enabled the fund to capitalize on high-performing segments even in volatile market conditions.

Investors looking for strong long-term growth may find mid-cap funds an attractive option, particularly those with proven track records and well-diversified portfolios.