Midcap mutual funds deliver 19% return in 3 months. Check top performers

Economic Times

12-06-2025

ETMarkets.com
In May, the midcap funds received an inflow of Rs 2,808 crore, witnessing a decline of 15% month-on-month from an inflow of Rs 3,313 crore in April.
Despite delivering the highest average return of approximately 18.77% over the past three months—topping all equity mutual fund categories—midcap mutual funds saw a decline in investor interest. Monthly inflows into the category fell by 15% in May, following a 4% drop in April, an analysis by ETMutualFunds showed.An expert noted that the analysis points to rising investor caution, driven by concerns over high valuations and market volatility. Despite strong gains in the mid-cap index over the past quarter, many investors seem to be booking profits or adopting a wait-and-watch approach, wary that the segment may be overheating.'This decline in inflows despite performance suggests that investors may perceive current mid-cap valuations as stretched. Heightened geopolitical uncertainties and stretched market valuations are prompting a shift in preference towards safer large-cap or hybrid categories. It may also indicate a sophistication among retail investors,' Adhil Shetty, CEO, Bankbazaar.com shared with ETMutualFunds.
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There were around 22 categories in the said period, of which midcap funds ruled the return chart. Out of 29 funds in the midcap category, Invesco India Midcap Fund offered the highest return of 23.99% in the last three months.
In the same period, HSBC Midcap Fund delivered a return of 23.06%, followed by Edelweiss Mid Cap Fund with 21.06%, and Mirae Asset Midcap Fund with 20.75%.Kotak Emerging Equity Fund, the second-largest midcap fund based on assets managed, delivered a return of 19.88% in the last three months. HDFC Mid-Cap Opportunities Fund, the largest midcap fund based on assets managed, delivered a return of 17.34% in the mentioned period. SBI Magnum Midcap Fund offered the lowest return of 13.54% in the last three months.Commenting on the performance of midcap funds, the expert noted that given the sharp rally in midcap stocks and increasing market volatility, lump-sum investments in this segment involve higher timing risks. For long-term investors, a staggered approach through midcap SIPs (Systematic Investment Plans) or STPs (Systematic Transfer Plans) continues to be the most prudent strategy.'SIPs help average out costs over time and reduce the risk of entering at market peaks—an important consideration given that mid-caps tend to be more sensitive to market corrections. While a short-term correction may happen, trying to time the market precisely is notoriously difficult. Therefore, disciplined investing via SIPs/STPs over the next 12–18 months can help build exposure without chasing short-term highs,' Shetty further shared with ETMutualFunds.In May, the midcap funds received an inflow of Rs 2,808 crore, witnessing a decline of 15% on a monthly basis from an inflow of Rs 3,313 crore in April. The inflows in April were down by 4% from the inflow of Rs 3,438 crore in March.
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With investors adopting a cautious approach and the category witnessing a decline in inflows for two consecutive months, Shetty shares that the outlook for mid-cap funds over the medium to long term remains constructive, especially for investors with a 5-year-plus horizon.Shetty believes that with India's economic recovery gaining momentum, earnings growth in the midcap segment is likely to remain strong, driven by structural themes such as the manufacturing push, rising domestic consumption, and a revival in capital expenditure.'However, short-term headwinds such as global interest rate uncertainty, oil prices, and election-linked volatility may trigger intermittent corrections. Valuations are above historical averages, which warrants caution. Hence, future returns may moderate from recent highs,' he shared.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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