HDFC Mid Cap Fund has crossed the ₹1 lakh crore AUM milestone, becoming the fourth active mutual fund scheme to reach this level after Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund and HDFC Balanced Advantage Fund. According to reports from Mint, this achievement has raised questions among investors about whether very large mutual funds can continue delivering strong returns. The milestone highlights the growing scale of India's mutual fund industry and the increasing popularity of mid-cap investment strategies.
Bharath Rathore, executive director at Anand Rathi Wealth, emphasized that investors should not avoid a mutual fund simply because its AUM has crossed ₹1 lakh crore. As reported by Mint, Rathore stated that fund size does not by itself determine performance, pointing to the large-cap category where ICICI Prudential Large Cap Fund was among the top performers in 2025 despite being the largest fund in its category, while Axis Large Cap Fund delivered below-median performance. Sriram BKR, senior investment strategist at Geojit Financial Services, noted that size can become a concern when schemes operate in segments with limited market depth or liquidity, making it important to look beyond AUM when evaluating schemes.
According to Mint reports, data does not show a straightforward relationship between AUM and underperformance. Sriram BKR highlighted that among the top 10 performing funds over three- and five-year periods across flexi-cap, multi-cap, mid-cap and small-cap categories as of June-July 2026, several had AUM rankings within the top 10 or above their respective category averages. This suggests that portfolio decisions, rather than corpus size alone, remain the key driver of returns. In categories such as mid-caps, where schemes must maintain at least 65% exposure to mid-cap stocks, fund managers still have room to deploy remaining allocation across other market-cap segments.
As reported by Mint, both experts recommend investors look beyond fund size when making investment decisions. Bharath Rathore recommends assessing risk-adjusted return measures such as the Sharpe and Sortino ratios, the fund's ability to generate alpha consistently across market cycles and the quality of its underlying portfolio. Sriram BKR highlighted the importance of consistency of performance against peers, quality of returns and portfolio quality. Investors should also examine the Information Ratio, which compares a portfolio's performance against its benchmark relative to the volatility of that excess return, and look at active share and how the portfolio's positioning has translated into returns. According to Mint, the advice is not to exit based on AUM alone, but to judge funds by how well they are being managed.
