In recent months, mid-cap index funds, especially the Nifty Midcap 150, have garnered significant attention from investors. This shift comes as many actively managed mid-cap funds have failed to outperform their benchmarks. The trend highlights a growing preference for passive investing in the mid-cap space, where consistent returns are more predictable. Over the past year, about half of the actively managed mid-cap funds underperformed their respective benchmarks, making passive funds a more attractive option for many investors.
One of the reasons for this underperformance is the high volatility in the mid-cap sector, which makes it challenging for active fund managers to consistently pick winning stocks. As a result, passive funds that mirror the performance of a mid-cap index are becoming a go-to choice for investors seeking stable growth without the unpredictability of active management.
With the increase in the number of mid-cap focused passive funds, investors now have more options to consider as they aim for better long-term growth potential with lower risk compared to actively managed alternatives.
For those looking to balance risk and reward, exploring mid-cap index funds could be a strategic decision, especially in a market where active funds are struggling to keep pace.
