Mid-Cap Funds Performance: A Rolling vs Point-to-Point Return Study

Introduction

When it comes to evaluating mutual funds, point-to-point (PTP) returns are one of the most common metrics used by investors. By simply comparing the NAV between two dates, PTP performance gives a quick snapshot of how a fund has done. However, in the case of mid-cap funds, this approach can often paint an incomplete picture. Mid-Caps are inherently more volatile than large-caps, with sharper ups and downs, making it important to look beyond just start-and-end values to understand the true investor experience.

In this blog, we analyze both active and passive mid-cap mutual funds on a PTP basis, while also highlighting why relying only on this metric may lead to misleading conclusions. Instead, a deeper dive into rolling returns, consistency, and risk-adjusted measures is necessary to get the complete view. We’ve done a similar study for large-cap funds.

Methodology

To evaluate how active and passive funds stack up against each other, we followed this structured approach:

1. Fund Selection

   Mid-Cap Mutual Funds:

   26 actively managed Mid-Cap funds

   4 passive Mid-Cap funds

   
   

2. Return Measurement

   Point-to-Point Returns: Calculated for 1-year, 3-year, 5-year, and 10-year periods.

   Rolling Returns: We have sourced 3-year rolling periods from Rolling Returns Of Mutual Funds vs Mutual Fund Benchmark | Advisorkhoj, India to assess consistency over time.

   
   

3. Benchmarking

   Each fund was compared with its respective benchmark index (e.g., Nifty Midcap 150 TRI & BSE Midcap 150 TRI)

   
   

4. Performance Evaluation

   We checked how many Mid Cap Funds outperformed their benchmark across different time frames.

   We also calculated the average return of Mid-Cap funds to measure whether active management provided any meaningful advantage after fees.

   Alpha=Fund Return−Benchmark Return.

Outperformance of Mid-Cap Mutual Funds (Point-to-Point Returns till June 2025)

Mid-Cap Active Funds (26 funds)

• 1-Year (Jun 2024 – Jun 2025): 16 funds (61.54%) outperformed

• 3-Year (Jun 2022 – Jun 2025): 9 funds (34.62%) outperformed

• 5-Year (Jun 2020 – Jun 2025): 9 funds (34.62%) outperformed

• 10-Year (Jun 2015 – Jun 2025): 10 funds (38.46%) outperformed

Mid-Cap Index (Passive) Funds (4 funds)

• 1-Year: 0 outperformed

• 3-Year: 0 outperformed

Since most of these funds are relatively new (only 3–4 years old), we don’t yet have sufficient data to evaluate their performance on a 5-year or 10-year PTP basis.

Performance of Mid-Cap Mutual Funds vs. Benchmark

(Point-to-Point Returns till June 2025)

1. Short Term (1Y)  - Very little differentiation in the short term, active funds didn’t generate much alpha.

2. Medium Term (3-5Y) - On average, mid-cap active funds could not outperform their benchmark (Nifty Midcap 150) because only 9 funds outperformed the benchmark out of 26. Passive funds succeeded in replicating the benchmark with only 2% difference caused by the expense ratio and tracking error.

4. Long-term - Over the decade, active funds were a inch back by their benchmark.

Performance Analysis of Mid-Cap funds vs the Benchmark using rolling returns

Mid-Cap Active Funds

• Average rolling 3-year return: 20.50%

• Benchmark return: 20.96%

• Out of 26 funds, only 8 outperformed the benchmark

• Indicates that most active funds struggled to generate consistent alpha

• Baroda BNP Paribas Mid Cap Fund, Edelweiss Mid Cap Fund, Kotak Midcap Fund and Mahindra Manulife Mid Cap Fund consistently gave returns and outperformed the index by a significant margin.

Mid-Cap Passive Funds

• Average rolling 3-year return: 23.69%

• Benchmark return: 14.90%

• None of the  passive funds outperformed their benchmark

• The benchmark considered here is the Nifty Midcap 150 Index. Since there are only four passive mid-cap funds, all launched in the past 4–5 years, the shorter track record inflates the average rolling return of passive funds, making it appear slightly higher than the active benchmark comparison.

• Aditya Birla Sun Life Nifty Midcap 150 Index Fund, ICICI Prudential Nifty Midcap 150 Index Fund, Motilal Oswal Nifty Midcap 150 Index Fund, and Nippon India Nifty Midcap 150 Index Fund were the constituents of mid-cap passive funds.

Conclusion

On a point-to-point (PTP) basis, the returns of active funds ranged between 28–34%, indicating strong short-term performance. However, when we examined the rolling returns, both the benchmark and the funds averaged around 20%, highlighting a more consistent performance over time.

Rolling returns are crucial because they provide a smoother, long-term perspective of fund performance by capturing returns over overlapping periods rather than a single start-to-end point. This helps investors understand the consistency and volatility of returns, and reduces the bias that may arise from choosing specific start or end dates. Unlike PTP returns, rolling returns offer a more realistic view of risk-adjusted performance and help compare funds against benchmarks reliably. Investors often consult a Mutual Fund Advisor to interpret these metrics in the context of their portfolio.