Top Mid-Cap Mutual Funds in India (2025): Performance, Risk, and Cost Compared

Summary

Mid-cap mutual funds present a compelling investment avenue, balancing growth potential with manageable risk. Our analysis of 20 long-standing funds reveals that consistent performers like HDFC, Edelweiss, and Invesco have excelled across timeframes, delivering strong CAGR returns and superior Sharpe Ratios, while maintaining reasonable costs and turnover levels.

On the flip side, high expenses or poor risk-adjusted returns can hinder performance, as seen in funds like Taurus and Tata Mid Cap Fund. Interestingly, turnover ratios showed no direct correlation with fund returns, highlighting that active management can succeed or fail, depending on strategy execution.

Key Takeaways:

• Top funds blend performance, cost-efficiency, and risk management.

• Sharpe Ratio is critical for understanding the quality of returns.

• Expense ratio and turnover matter—but only when paired with consistency.

• Look beyond just returns—assess fund manager track record, portfolio structure, and long-term discipline.

  
  

Investors should aim for well-rounded funds that align with their financial goals, risk appetite, and investment horizon. Mid-cap funds reward patience and discipline—but only when selected with the right metrics in mind.

Introduction

You’ve likely come across the term mid-cap mutual funds—often highlighted as a category of mutual funds offering higher growth potential than large-cap funds, while being less volatile than small-cap counterparts. But what exactly qualifies as a mid-cap fund, and how do these funds truly perform across different market cycles?

In this blog, we delve into the definition of mid-cap mutual funds, analyze their historical performance against benchmarks, evaluate their risk-adjusted returns, and explore how they recover in comparison to other fund categories.

We’ll also cover key factors such as expense ratios, turnover, and essential metrics to consider before making an investment. Whether you’re a seasoned investor or just starting out, gaining a deeper understanding of mid-cap funds can help you make more informed portfolio decisions.

What Are Mid-Cap Funds?

Mid-cap funds invest primarily in mid-sized companies — those ranked 101st to 250th by market capitalization (as per SEBI's classification in India), having a Market Cap Range (approx.) with a range of approx. 32000 crores to 1 lakh crores.

What Metrics Matter When Selecting a Mid-Cap Fund?

Methodology

While this analysis offers a data-driven comparison, consulting the best mutual fund advisor can provide you with personalized insights based on evolving market conditions and investor objectives.

1. Fund Selection

As of July 2025, there are 30 mid-cap mutual fund schemes available in the Indian market, out of which 20 have been in existence for 10 years or more. For this analysis, we selected all 20 (Direct Plans) of these funds to ensure a consistent and meaningful long-term performance comparison.

2. Data Sources

All historical fund data, including NAV, returns, and portfolio details, were sourced directly from the respective Asset Management Company (AMC) websites. Additionally, supporting information such as classification norms, AUM, and expense ratios was cross-referenced with data available on the AMFI (Association of Mutual Funds in India) website.

3. Comparison Metrics

To conduct a comprehensive evaluation, we analyzed the funds using the following key metrics:

• Return Comparison (3Y, 5Y, 10Y CAGR): We calculated the Compound Annual Growth Rate (CAGR) for 3-year, 5-year, and 10-year periods to assess how consistently each fund has delivered returns over different time horizons. This helps in understanding both short-term and long-term performance.

  
  

• Risk-Adjusted Returns: We used the Sharpe Ratio to check how well a mutual fund is performing compared to the risk it's taking. It tells us how much extra return the fund gives for each unit of risk (like ups and downs in returns). A higher Sharpe Ratio means the fund is doing a better job of giving returns without taking too much additional risk.

  
  

• Expense Ratio: This represents the annual fees charged by the fund house to manage the fund. A lower expense ratio directly benefits the investor by reducing the cost of investing, especially over the long term.

  
  

• Turnover Ratio: The portfolio turnover ratio indicates how frequently the fund manager is buying and selling securities within the fund. A high turnover could signal active management but may also lead to higher transaction costs and tax implications.

Performance Analysis

A 3-year CAGR shows us Recent performance trend and reflects short-to-medium term performance. Useful to judge how a fund performed in the recent market environment.

A 5-year CAGR shows us Medium-term consistency and Balances recent performance with slightly longer trends. Good for seeing if recent outperformance is sustainable.

A 10 Year CAGR Long-term compounding ability and how the fund has performed across full market cycles (bull and bear). Great for understanding fund stability and manager quality.

Key Insights from Mid-Cap Mutual Fund Performance

1. Top Consistent Performers - These funds have delivered high returns across all timeframes and strong Sharpe Ratios, all while maintaining reasonable expense and turnover ratios:

   
   

   1. Edelweiss Mid Cap Fund

      • 3Y CAGR: 33.67%, 5Y: 35.28%, 10Y: 19.49%

      • Sharpe Ratio: 1.52 (strong)

      • Expense: 0.40% (lowest in peer group)

      • Turnover: 50% (moderate)

        
        

   2. Invesco India Mid Cap Fund

      • 3Y CAGR: 34.77%, 5Y: 32.40%, 10Y: 19.68%

      •  Sharpe Ratio: 1.54 (very strong)

      •  Expense: 1.05% (above average)

      • Turnover: 45% (moderate)

        
        

   3. HDFC Mid Cap Fund

      • 3Y CAGR: 33.56%, 5Y: 33.31%, 10Y: 18.90%

      •  Sharpe Ratio: 1.66 (highest)

      •  Expense: 0.77%

      •  Turnover: 18% (low)

   
   

   These three funds balance high returns with strong risk-adjusted performance and cost efficiency, especially Edelweiss and HDFC.

2. High Turnover, High Return — But Not Always High Efficiency

   1. Motilal Oswal Midcap Fund

      • Highest 3Y (36.89%) and 5Y (38.42%) returns

      • Sharpe: 1.31 (moderate compared to peers)

      • Expense: 0.42% (very low)

      • Turnover: 172% (very high)

        
        

   Despite very high turnover, Motilal has delivered top returns, possibly due to active bets paying off. However, its Sharpe Ratio (1.31) is not the highest, indicating volatility or higher risk in delivering these returns.

   
   

3. Low Returns & Below-Benchmark Sharpe Ratios

   1. ∙ DSP Midcap Fund

      • 3Y: 24.91%, 5Y: 23.43%, 10Y: 16.07%

      • Sharpe: 1.01 (weakest among most)

      • Expense: 0.75%

      • Turnover: 35%

        
        

   2. ∙ Taurus Mid Cap Fund

      • 3Y: 24.00%, 5Y: 24.63%, 10Y: 15.39%

      • Sharpe: 1.03

      • Expense: 2.16% (highest)

      •  Turnover: 81%

These funds have underperformed across all horizons, with low Sharpe ratios and, in Taurus’s case, a very high expense ratio, which could be affecting net returns.

4.  Risk-Adjusted Stars vs Absolute Return Leaders - Some funds may not top return charts but deliver very efficient risk-adjusted returns:

   1. Franklin India Prima Fund

      • Sharpe: 1.35 (high)

      • Expense: 0.95%

      • 3Y CAGR: 30.56% (benchmark-level), but lower long-term performance

        
        

   2. Sundaram Mid Cap Fund

      • Sharpe: 1.4 (strong)

      • Expense: 0.93%

      • 3Y: 31.00% (above benchmark), 5Y: 29.87%, 10Y: 15.77% (slower long-term compounding)

These funds may appeal to investors seeking stability and better risk-adjusted consistency, even if long-term compounding is slightly lower.

5. Expense Ratios Don't Always Correlate with Performance

   1. Tata Mid Cap Fund

      • Expense: 2.16% (highest)

      • 3Y: 27.53% (below benchmark), 5Y: 28.75%, 10Y: 16.75%

      • Sharpe: 1.12 (average)

      
      

   2. Kotak Midcap Fund

      • Expense: 0.42% (among the lowest)

      • 3Y: 29.03%, 5Y: 32.06%, 10Y: 19.41%

      • Sharpe: 1.31 (solid)

        
        

   Lower cost (Kotak) has not hurt performance and actually aligns with high returns and the Sharpe Ratio. Higher cost (Tata) didn’t translate into outperformance.

   
   

6. Turnover Ratio: Varies Widely with No Fixed Impact - Ranges from 13% (Nippon) to 172% (Motilal)

   
   

   • Motilal Oswal: 172% turnover, top returns

   • Nippon India: 13% turnover, consistent performer

   • UTI Mid Cap Fund: 168% turnover, among lowest 10Y return (15.46%)

Insight: High turnover doesn’t guarantee higher returns or lower them — it simply reflects the fund manager’s active strategy. It does not result in tax for investors, but may indicate frequent stock churn and higher internal costs.

Conclusion

The table below brings into focus how mid-cap mutual funds differ across key parameters. Some funds deliver a rare combination of strong returns, low costs, and high risk-adjusted efficiency. Others excel in one area but fall short in another. What becomes clear is that no single metric can capture a fund's overall quality. It's the interplay of return consistency, Sharpe ratio, and cost structure that separates long-term performers like HDFC, Edelweiss, and Invesco from the rest.

Parameter	Best-in-Class Funds
High Return + Sharpe + Low Cost	Edelweiss, HDFC, Invesco
Highest 3/5 Year Returns	Motilal Oswal
Best Risk-Adjusted Efficiency	HDFC, Edelweiss, Franklin
Low Return + High Cost	Taurus, Tata
Cost-Efficient Performer	Kotak, HDFC, Edelweiss