Midcap MF AUM jumps 2.5x in 3 years; Mahindra Manulife fund beats benchmark on SIP returns -- should you bet?

Midcap mutual funds have seen heightened investor interest over the past three years, with assets under management rising nearly 2.5 times to ₹4.61 lakh crore in December 2025 from ₹1.85 lakh crore in December 2022. The category now accounts for around 13 per cent of total equity mutual fund assets, reflecting its growing importance in investor portfolios.

This rising interest has been backed by strong market performance. The Nifty Midcap 150 TRI has outperformed both the Nifty 100 TRI and the Nifty Smallcap 250 TRI across one-, three-, five- and seven-year timeframes by comfortable margins. Such consistent benchmark outperformance, however, makes it increasingly difficult for active midcap funds to generate sustained alpha.

Against this backdrop, Mahindra Manulife Mid Cap Fund has emerged as a standout performer across medium and longer timeframes. A monthly systematic investment plan (SIP) in the fund over the past eight years has delivered an internal rate of return (XIRR) of 22.3 per cent, outperforming the 21.1 per cent generated by the Nifty Midcap 150 TRI over the same period, according to fund data.

The scheme, which was launched on January 30, 2018, has also beaten its benchmark across multiple point-to-point return periods. Over three-, five- and seven-year horizons, the fund has delivered returns at least two percentage points higher than the Nifty Midcap 150 TRI. It has also consistently outperformed the category average across one-, three-, five- and seven-year timeframes, underscoring its relative strength within the midcap universe.

SIP investors have also benefited. A monthly SIP in the fund since inception in January 2018 has delivered an XIRR of 22.3 per cent over eight years, outperforming the Nifty Midcap 150 TRI’s 21.1 per cent.

How peers compare on five-year returns

Mahindra Manulife’s performance stands out even as several other midcap schemes have delivered strong results. Over the last five years, Motilal Oswal Midcap Fund (Direct) has delivered a CAGR of 24.7 per cent, HDFC Mid Cap Fund 23.8 per cent, and Nippon India Growth Mid Cap Fund 23.56 per cent. In comparison, the Nifty Midcap 150 TRI returned 20.26 per cent, while the category average stood at 19.98 per cent.

Return outcomes differ across investment styles. A lump sum investment of ₹1 lakh made five years ago grew to ₹3.01 lakh in Motilal Oswal Midcap Fund, ₹2.91 lakh in HDFC Mid Cap Fund, and ₹2.88 lakh in Nippon India Growth Mid Cap Fund. SIP outcomes tell a slightly different story. A ₹10,000 monthly SIP over the same period grew to ₹10.38 lakh in HDFC Mid Cap Fund and ₹10.28 lakh in Nippon India Growth Mid Cap Fund, marginally ahead of Motilal Oswal Midcap Fund’s ₹9.88 lakh.

Risk metrics also vary. While all three funds are classified as very high risk — typical for the midcap category — HDFC Mid Cap Fund stands out on risk-adjusted returns, with a Sharpe ratio of 1.27 and a lower beta of 0.85. Motilal Oswal Midcap Fund has delivered higher returns but with greater volatility, while Nippon India Growth Mid Cap Fund strikes a balance between risk and return.

Portfolio strategy and outlook

Mahindra Manulife Mid Cap Fund’s portfolio remains diversified, with 61 stocks and the top 10 accounting for about 26 per cent of assets. Financial Services form the largest allocation at around 29 per cent, supported by automobiles, healthcare and select capital goods. With cash levels typically capped at 2–3 per cent, the fund stays largely invested to capture market upswings.

Overall, midcap funds have benefited from strong earnings growth, healthier balance sheets and India’s domestic recovery. While volatility remains inherent, disciplined allocation and long-term investing continue to reward investors willing to ride through market cycles.