When people begin their investment journey, the first instinct is often to search for the top performing mutual funds and invest in them.
It sounds logical. If a fund has delivered the best returns recently, it must be a good investment going forward as well.
However, investing based purely on recent top performers can often lead to disappointing results.
Many investors start SIPs in funds that have performed well in the past year or two, only to realise later that the returns do not match their expectations.
This raises an important question.
If investors are choosing the best performing funds, why do their portfolios not always deliver the expected results?
The answer often lies in one simple but overlooked fact:
Mutual fund rankings change frequently.
What Happens When We Analyse Long-Term Data?
To understand this better, we analysed 32 mid-cap mutual funds over the past 10 years.
The objective was simple. To answer one key question:
If a fund is ranked number one today, does it remain at the top consistently in the future?
The results were quite surprising. Across these 32 mid-cap funds, not a single fund managed to remain the top performer for three consecutive years.
| Scheme Name | NAV Date | 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | Top 5 (Times) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Aditya Birla SL Mid Cap Fund Plan Reg (G) | 20/02/2026 | 21 | 8 | 24 | 11 | 25 | 5 | 21 | 22 | 19 | 6 | 7 | 5 | 0 |
| Axis Midcap Fund (G) | 20/02/2026 | 7 | 18 | 11 | 28 | 24 | 16 | 6 | 1 | 1 | 12 | 20 | 20 | 2 |
| Bandhan Midcap Fund Reg (G) | 20/02/2026 | 12 | 27 | 8 | 15 | 0 | ||||||||
| Bank of India Mid Cap Fund (G) | 20/02/2026 | 21 | 0 | |||||||||||
| Baroda BNP Paribas Midcap Fund Reg (G) | 20/02/2026 | 5 | 13 | 15 | 23 | 9 | 15 | 13 | 8 | 20 | 4 | 16 | 2 | 2 |
| Canara Robeco Mid Cap Fund Reg (G) | 20/02/2026 | 18 | 9 | 18 | 25 | 0 | ||||||||
| DSP Mid cap Fund Reg (G) | 20/02/2026 | 6 | 15 | 22 | 12 | 23 | 24 | 12 | 3 | 6 | 15 | 3 | 13 | 2 |
| Edelweiss Mid Cap Fund Reg (G) | 20/02/2026 | 16 | 11 | 4 | 13 | 12 | 8 | 5 | 9 | 17 | 2 | 14 | 8 | 2 |
| Franklin India Mid Cap Fund (G) | 20/02/2026 | 25 | 17 | 9 | 16 | 13 | 22 | 20 | 11 | 5 | 16 | 6 | 14 | 0 |
| HDFC Mid Cap Fund (G) | 20/02/2026 | 8 | 3 | 17 | 4 | 2 | 18 | 15 | 14 | 8 | 13 | 2 | 18 | 4 |
| Helios Mid Cap Fund Reg (G) | 20/02/2026 | 29 | 0 | |||||||||||
| HSBC Midcap Fund Reg (G) | 20/02/2026 | 3 | 25 | 3 | 10 | 15 | 23 | 18 | 15 | 11 | 1 | 5 | 6 | 3 |
| ICICI Pru MidCap Fund (G) | 20/02/2026 | 2 | 1 | 19 | 22 | 10 | 12 | 17 | 19 | 7 | 10 | 10 | 19 | 2 |
| Invesco India Mid Cap Fund (G) | 20/02/2026 | 22 | 4 | 2 | 21 | 17 | 13 | 8 | 10 | 3 | 7 | 15 | 15 | 3 |
| ITI Mid Cap Fund Reg (G) | 20/02/2026 | 24 | 7 | 12 | 7 | 14 | 0 | |||||||
| JM Midcap Fund Reg (G) | 20/02/2026 | 11 | 26 | 5 | 3 | 1 | ||||||||
| Kotak Midcap Fund (G) | 20/02/2026 | 9 | 16 | 6 | 26 | 6 | 10 | 16 | 4 | 10 | 9 | 4 | 9 | 2 |
| LIC MF Midcap Fund Reg (G) | 20/02/2026 | 23 | 24 | 13 | 17 | 22 | 20 | 9 | 20 | 14 | 0 | |||
| Mahindra Manulife Mid Cap Fund Reg (G) | 20/02/2026 | 4 | 19 | 16 | 2 | 18 | 7 | 19 | 7 | 2 | ||||
| Mirae Asset Mid Cap Fund Reg (G) | 20/02/2026 | 27 | 2 | 27 | 19 | 7 | 9 | 11 | 1 | |||||
| Motilal Oswal Midcap Fund Reg (G) | 20/02/2026 | 31 | 29 | 1 | 5 | 3 | 2 | 23 | 2 | 12 | 20 | 9 | 1 | 5 |
| Nippon India Growth Mid Cap Fund (G) | 20/02/2026 | 1 | 12 | 20 | 1 | 5 | 11 | 14 | 6 | 9 | 8 | 11 | 16 | 2 |
| PGIM India Midcap Fund Reg (G) | 20/02/2026 | 17 | 22 | 25 | 29 | 20 | 1 | 1 | 12 | 19 | 17 | 17 | 12 | 2 |
| Quant MidCap Fund (G) | 20/02/2026 | 30 | 28 | 28 | 18 | 1 | 6 | 2 | 21 | 2 | 19 | 19 | 10 | 3 |
| Samco Mid Cap Fund (G) | 20/02/2026 | 0 | ||||||||||||
| SBI Midcap Fund Reg (G) | 20/02/2026 | 13 | 20 | 26 | 20 | 11 | 4 | 4 | 16 | 21 | 18 | 8 | 3 | 3 |
| Sundaram Mid Cap Fund Reg (G) | 20/02/2026 | 14 | 10 | 10 | 9 | 8 | 19 | 22 | 18 | 16 | 14 | 1 | 4 | 2 |
| Tata Mid Cap Fund Reg (G) | 20/02/2026 | 15 | 5 | 23 | 8 | 16 | 17 | 10 | 5 | 13 | 3 | 18 | 7 | 1 |
| Taurus Mid Cap Fund (G) | 20/02/2026 | 28 | 21 | 29 | 14 | 4 | 21 | 7 | 13 | 4 | 5 | 13 | 11 | 2 |
| Union MidCap Fund Reg (G) | 20/02/2026 | 10 | 14 | 14 | 24 | 21 | 3 | 1 | ||||||
| UTI Mid Cap Fund (G) | 20/02/2026 | 19 | 23 | 21 | 27 | 19 | 14 | 3 | 17 | 15 | 12 | 12 | 17 | 1 |
| WhiteOak Capital Mid Cap Fund Reg (G) | 20/02/2026 | 26 | 6 | 7 | 6 | 0 |
Example: PGIM India Midcap Fund
Let us look at an example.
The PGIM India Midcap Fund ranked at the top in 2020 and 2021.
Naturally, any investor looking at these results might conclude that this is one of the best funds to invest in.
However, when we look at the ranking in 2025, the same fund drops to rank 22.
Now it is important to clarify that this does not mean the fund manager did something wrong.
What it highlights is a simple reality of investing:
Market conditions change, and with them, fund rankings also change.
Different sectors perform at different times, and this leads to continuous shifts in performance across funds.
Another Example: Quant MidCap Fund
Let us consider another example.
The Quant MidCap Fund ranked among the top funds in 2022.
However, when we look at the ranking in 2026, the fund’s position dropped to rank 30.
Again, this does not necessarily indicate poor management. It simply reflects the dynamic nature of markets.
And this pattern is not limited to just these two funds.
The same trend can be observed across many of the 32 funds analysed.
The Real Mistake Investors Often Make
The biggest mistake many investors make is assuming that past winners will continue to remain winners in the future.
Investors often look at the previous year’s top performers and assume that the same funds will continue to deliver superior results going forward.
However, as the data shows, mutual fund rankings change frequently, and chasing recent winners may not always lead to the best outcomes.
If Not Past Performance, Then What Should Investors Look At?
If chasing top performers is not the right approach, the next question naturally becomes:
How should investors select mutual funds?
There are three important factors that investors should consider.
1. Compare Fund Performance With Its Benchmark
The first step is to compare a fund’s performance with its benchmark index.
When investors choose an actively managed mutual fund, they are paying a management fee for the fund manager’s expertise.
The expectation is that the fund manager will generate returns higher than the benchmark.
If a fund only delivers returns similar to its benchmark, investors must ask an important question:
What is the benefit of paying higher fees if the fund is simply matching the market?
Therefore, it is important to check whether the fund has consistently outperformed its benchmark over time.
2. Understand the Team Managing the Fund
Another factor that many investors overlook is the team behind the fund.
Returns alone do not tell the full story.
Investors should also try to understand:
- The experience of the fund manager
- The investment philosophy followed by the fund
- Whether the strategy focuses on growth, value, or a combination of both
- The stability of the management team
- The fund’s approach to risk management
A strong and stable investment team often plays a significant role in long-term fund performance.
3. Review Investments Periodically
Investing in a fund and then completely forgetting about it may not always be the best strategy.
Many investors follow a “set it and forget it” approach, but mutual fund investments should be reviewed periodically.
Investors should monitor factors such as:
- Whether the fund continues to perform well relative to its benchmark
- Whether the fund manager has changed
- Whether there have been major changes in the fund’s investment strategy
Regular reviews help ensure that the investment continues to remain aligned with the investor’s goals.
Why This Process Can Be Difficult for Many Investors
While these steps sound simple in theory, implementing them consistently can be challenging for many investors.
Analysing long-term performance, comparing it with benchmarks, studying fund managers, and evaluating risk levels requires:
- Time
- Access to proper tools
- Investment expertise
For many individuals managing busy professional and personal lives, conducting such detailed analysis regularly can become difficult.
The Role of a Financial Adviser
This is where the role of a financial adviser can become important.
A financial adviser can help investors:
- Evaluate mutual funds objectively
- Track performance over time
- Identify changes in fund strategy or management
- Ensure the portfolio remains aligned with long-term financial goals
Of course, investors who are comfortable doing their own research can manage this independently as well. If you have any questions about mutual fund selection, benchmarking, or how to structure your investment portfolio, feel free to reach out on +91 93270 34882
Conclusion
Selecting mutual funds purely based on recent top performance can often lead to poor investment decisions.
Mutual fund rankings change frequently, and past winners do not always remain future winners.
Instead of chasing the latest top performers, investors should focus on:
- Consistent performance relative to benchmarks
- The strength and stability of the fund management team
- Regular portfolio reviews
By focusing on these factors, investors can make more informed decisions and build a more resilient investment portfolio over time.
