HDFC Mid Cap Fund tops ₹1 trillion AUM: Is it still worth considering? | Stock Market News

HDFC Mid Cap Fund has reached a significant milestone by crossing ₹1 trillion in assets under management (AUM) in June 2026, becoming the third scheme from HDFC Mutual Fund to achieve this feat after HDFC Flexi Cap Fund and HDFC Balanced Advantage Fund.

It is also the largest among funds that invest predominantly in lower market caps.

The achievement comes as the fund enters its 20th year, highlighting its remarkable journey of delivering consistent long-term wealth creation for investors.

Since its launch in June 2007, HDFC Mid Cap Fund has delivered a CAGR of 17.13%, outperforming its benchmark.

Let's find out the factors behind the fund’s growth, highlighting its risk, return, and portfolio strategies.

Launched in June 2007, HDFC Mid Cap Fund (earlier HDFC Mid-Cap Opportunities Fund) has solidified its position in the mid cap fund category by consistently delivering above-average returns.

As of June 2026, the fund had assets under management worth ₹1 trillion, the highest in the mid cap fund category. For the context, the second largest scheme in the category has an AUM of ₹67,600 crore

The fund is managed by Chirag Setalvad, the head of equities at HDFC AMC, since the inception of the scheme. Thus, the fund benefits from the stability at the fund management level.

Categorised under mid-cap funds, HDFC Mid Cap Fund is mandated to invest at least 65% of its assets in equity & equity-related instruments of mid-sized companies.

These companies are defined as those ranking 101st to 250th on full market capitalisation basis.

The fund invests in stocks which have reasonable growth prospects, sound financial strength, sustainable business models, and are available at acceptable valuations.

It follows the bottom-up approach to identify high-quality businesses for the long term.

Following a buy-and-hold investment strategy, the fund manager avoids unnecessary portfolio changes and refrains from chasing momentum.

The fund usually carries a low turnover ratio of around 5-20%, which reflects the strong long-term conviction the fund manager has when picking stocks for the portfolio.

Moreover, the fund is cautious in its approach, which helps it to perform well even during uncertain market phases.

The fund usually remains fully invested across market cycles, taking very limited cash calls.

HDFC Mid Cap Fund experienced a challenging phase between 2016 and 2021, during which it struggled to outperform the benchmark.

However, the fund has staged a remarkable comeback over the last few years, delivering significant gains as its high conviction bets paid off.

On a rolling three-year return basis, the fund has outperformed the benchmark Nifty Midcap 150 – TRI and the category average by a notable margin of 2-3%.

Over the longer five-year period too the fund has generated a substantial lead over the benchmark while outperforming many of its peers.

The volatility registered HDFC Mid Cap Fund is among the lowest in the category and is much lower than the benchmark.

The fund stands out for its superior risk-adjusted returns, as reflected in its remarkable Sharpe and Sortino ratios.

These metrics highlight the fund’s ability to generate impressive returns while managing risks better than both its benchmark and category peers.

HDFC Mid Cap Fund usually holds a large portfolio of 65-75 stocks and has limited the exposure in single stock to well within the 5% mark to mitigate downside risk.

As of June 2026, the fund held 76 stocks with top holdings in The Federal Bank, Max Financial Services, AU Small Finance Bank, Balkrishna Industries, and Fortis Healthcare.

In terms of sectors, the portfolio is dominated by auto ancillaries, bank, healthcare, infotech, finance, and consumption that form 67.4% of its assets.

The fund invests primarily in mid-caps (around 65% of its assets), along with tactical allocation of 15-20% in small caps and 5-15% in large caps.

As of June 2026, the fund has an allocation of 63.2% to mid-cap stocks, 10.7% to large-cap stocks, 18.2% to small-cap stocks, and the balance in cash.

HDFC Mid Cap Fund has consistently shown strong performance across bullish and bearish market conditions.

The fund’s focus on fundamentally sound stocks having healthy growth prospects allows it to benefit from their long-term potential.

By emphasising stocks with a reasonable margin of safety the fund has been successful in limiting the downside risk.

It maintains diversification across a range of stocks and sectors and adopts a prudent investment approach, helping it adapt well despite its large corpus.

The fund is led by a high-conviction-oriented fund manager who is a veteran in the mid and small cap space.

However, the fund may underperform in the short run when the market is momentum-driven.

Table Note: Data as of July 26, 2026The securities quoted are for illustration only and are not recommendatory.Past performance is not an indicator for future returns.Returns are on a point-to-point basis and in CAGR (%). Direct Plan-Growth option considered.

Risk ratios are calculated over 3 years, assuming a risk-free rate of 6% p.a.Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary

This article is syndicated from Equitymaster.com

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