While large-cap stocks have remained steady, mid-cap mutual funds have been the real growth engines of the past three years.
Despite market volatility, several schemes have delivered CAGR (Compound Annual Growth Rate) returns exceeding 25%, reflecting investors’ growing appetite for mid-sized companies that combine growth potential with diversification.
Here’s a look at the top-performing mid cap funds and what you should know before investing in them.
Top Mid Cap Funds (3-Year CAGR Performance)
(As per data till October 2025)
| Fund Name | 3-Year CAGR (%) | AUM (₹ crore) | Fund Manager | Launch Year |
|---|---|---|---|---|
| Motilal Oswal Midcap Fund | 28.6% | 12,450 | Nikhil Chaturvedi | 2014 |
| Kotak Emerging Equity Fund | 27.9% | 43,210 | Harish Krishnan | 2007 |
| Axis Midcap Fund | 26.8% | 25,700 | Shreyash Devalkar | 2011 |
| SBI Magnum Midcap Fund | 26.4% | 18,630 | R. Srinivasan | 2005 |
| HDFC Midcap Opportunities Fund | 25.7% | 46,800 | Chirag Setalvad | 2007 |
| Edelweiss Mid Cap Fund | 25.4% | 7,960 | Trideep Bhattacharya | 2017 |
(Source: AMFI, Value Research, as of October 2025)
Why Mid Caps Are Outperforming
Strong Earnings Growth:
Many mid-sized companies are benefiting from post-pandemic recovery and domestic consumption growth.
Sector Rotation:
Investors are shifting from overvalued large caps to growth-oriented mid caps, creating strong inflows into this segment.
Manufacturing & Capex Boom:
Government-led infrastructure and PLI (Production-Linked Incentive) schemes have boosted mid-cap industrials and capital goods firms.
Valuation Comfort:
Mid caps still offer relatively better valuations compared to premium large-cap peers.
What Investors Should Consider
Volatility Risk: Mid caps can correct sharply in downturns — they suit investors with moderate to high risk appetite.
Long-Term Horizon: Stay invested for 5 years or more to benefit from compounding.
SIP Advantage: Systematic Investment Plans (SIPs) help average out volatility.
Diversification: Don’t allocate more than 25–30% of your equity portfolio to mid caps.
Expert View
“Mid caps have entered a structurally positive phase driven by earnings recovery and balance sheet strength. However, investors must remain selective and long-term focused,” says Rajeev Thakkar, CIO at PPFAS Mutual Fund.
Conclusion
The mid cap rally continues to reward disciplined investors.
Funds like Kotak Emerging Equity, HDFC Midcap Opportunities, and Motilal Oswal Midcap remain strong performers, proving that well-managed mid cap portfolios can deliver large-cap-beating returns when held for the long term.
If you can handle moderate volatility and aim for higher growth, mid cap mutual funds deserve a place in your 2025 investment strategy.
❓ FAQs
1. What are mid cap mutual funds?
These funds invest in mid-sized companies — typically ranked between 101st and 250th by market capitalization.
2. Are mid cap funds risky?
Yes, they are riskier than large-cap funds but less volatile than small caps, offering a balanced risk-reward profile.
3. How much should I invest in mid caps?
Financial planners suggest 20–30% allocation of your total equity portfolio for long-term investors.
4. Are SIPs better for mid cap funds?
Yes, SIPs help average out market fluctuations and reduce the impact of volatility over time.
5. Which mid cap fund is best for 2025?
While Kotak Emerging Equity and Motilal Oswal Midcap Fund lead current charts, suitability depends on your risk profile and investment horizon.
Published on : 27th October
Published by : SMITA
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