These 8 mid-cap funds fail to beat their benchmark index: One has a negative alpha of 7 — check full list

Mid-cap mutual funds are often considered a middle ground between large-cap and small-cap funds. These schemes invest mainly in medium-sized companies that are considered to have greater growth potential than established large-cap companies, while carrying relatively lower risk than small-cap stocks.

Under the Securities and Exchange Board of India (SEBI) categorisation norms, mid-cap funds are required to invest at least 65% of their assets in mid-cap stocks. Within these regulatory guidelines, fund managers can actively decide on portfolio allocation and stock selection.

One of the key metrics used to assess whether an actively managed fund has added value is alpha. It measures whether a fund manager has generated returns above or below the benchmark after adjusting for market risk.

According to Value Research data, currently there are 8 mid-cap funds with a negative alpha, with one scheme having a negative alpha of more than 7.

Here’s a look at the list of funds.

*Source: Value Research, Direct plans, Data as on 30 June 2026, Alpha have been calculated using calendar month returns for the last three years.

Among the eight schemes, Taurus Mid Cap Fund has the lowest alpha at -7.20, indicating the highest level of underperformance against its benchmark. It is followed by PGIM India Mid Cap Fund, which has an alpha of -3.89.

The last one is Franklin India Mid Cap Fund, with an alpha of -0.16, indicating only a marginal underperformance relative to its benchmark.

• Positive alpha means the fund outperformed its benchmark.
• Zero alpha means the fund performed broadly in line with its benchmark.
• Negative alpha means the fund underperformed the benchmark.

For example, if a benchmark delivered a return of 20% over a particular period and a fund generated 12.8%, the fund would have underperformed the benchmark by 7.2 percentage points, resulting in an alpha of -7.20.

Negative alpha does not mean negative returns

A common misconception is that a fund with a negative alpha has delivered negative returns. However, that is not necessarily the case.

Despite recording an alpha of -7.20, the Taurus Mid Cap Fund has generated positive returns across multiple investment horizons.

The fund has delivered a 3-year CAGR of 11.87% and a 5-year CAGR of 12.61%. Over longer investment horizons, it has generated returns of 18.69% over seven years and 14.69% over 10 years. (Returns as on 29 July, 2026)

But Franklin India Mid Cap Fund, which has an alpha of just -0.16, has delivered better returns than Taurus Mid Cap Fund over the same periods. The fund has generated returns of 18.16% over three years, 15.68% over five years, 18.88% over seven years, and 15.03% over 10 years.

Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.