Midcap Mutual Funds See Notable Gains in 2026, with Certain Portfolios Rising up to 10%

Midcap Stocks Deliver Solid Returns Amidst Unfavourable Market Conditions

The strength visible in midcap stocks has helped several mutual funds from the segment deliver solid returns for their investors at a time when the mainboard indices are languishing due to the West Asia crisis. Despite an unfavourable macro setup, the Nifty Midcap 150 index had risen to its 52-week high late last month, with a year-to-date (YTD) gain of 3.61%.

According to data from the Association of Mutual Funds of India (AMFI), investors poured ₹6,551.40 crore into mid-cap funds in April, a record inflow of 8% on a monthly basis. In contrast, large-cap funds saw inflows drop 15.3% to ₹2,525 crore as investors sought opportunities beyond India's blue-chip firms.

Top Performing Midcap Funds YTD

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Several mutual funds from the midcap space have delivered up to 10% returns so far this year, shows data from ACE Mutual Fund. Here are the top performing midcap funds YTD:

The HSBC Midcap Fund has emerged as the leading midcap fund so far in 2026, with a 9.65% increase. It has a net asset value (NAV) of ₹441.35 and assets under management (AUM) of ₹13,400 crore. However, the expense ratio of the fund is high at 3.6%. The fund has delivered solid gains, rising 18% in a year, 104% in three years, and 410% in ten years.

The ICICI Pru Midcap Fund follows in the second spot with a return of 5.4%. The fund has an NAV of ₹332.28 and an AUM of ₹7,500 crore. Its expense ratio is significantly lower than HSBC Midcap Fund at 1.53%. The fund has also delivered competitive returns on a longer time frame, rising 14% in the last one year, 96% in three years, and 401% in ten years.

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According to analysts, the midcap performance can be attributed to several factors, including stronger-than-expected corporate results for Q4FY26, technical recovery from oversold territory, and lower valuations. Vinod Nair, Head of Research at Geojit Investments Limited, noted that the one-year forward price-to-earnings ratio for midcaps has fallen below the five-year average of 26x, encouraging the ongoing upside. However, he emphasized that for this momentum to be sustained, two key developments are necessary: a reversal in FIIs' sell strategy in India and a reduction in earnings setbacks estimated for H1FY27.