India Mid-Cap Funds Show Deepest Alpha Underperformance by July 2026
Recent data reveals several Indian mid-cap and small-cap funds delivered negative alpha, indicating underperformance against their benchmarks. Taurus Mid Cap Fund recorded the largest negative alpha as of July 2026.
Alpha Reveals Fund Underperformance
Indian equity mutual funds, particularly mid-cap and small-cap categories, offer distinct risk-return profiles. Evaluating fund performance extends beyond raw returns. Alpha (α) quantifies a fund's excess return relative to its benchmark, adjusted for market risk. A positive alpha means outperformance, while negative alpha indicates underperformance. AMFI's July 2026 data lists 33 mid-cap funds and 36 small-cap funds in India.
Mid-Cap Funds Post Significant Negative Alpha
Value Research data, current as of 31 July 2026, reveals three mid-cap funds with the most negative alpha over the last three calendar years. Taurus Mid Cap Fund posted the largest negative alpha at −5.38. This demonstrates it underperformed its benchmark by 5.38 percentage points after accounting for market risk.
UTI Mid Cap Fund followed with −3.33, and PGIM India Midcap Opportunities Fund recorded −3.24. Negative alpha does not imply a negative absolute return, only benchmark underperformance.
Small-Cap Funds Show Milder Underperformance
Small-cap funds also show instances of negative alpha, though less pronounced. Tata Small Cap Fund recorded the lowest alpha in its category, at −1.70. SBI Small Cap Fund followed with −1.20, and Kotak Small Cap Fund registered −0.72. These figures suggest comparatively smaller underperformance against their respective benchmarks than observed in the top mid-cap laggards. All alpha calculations used calendar month returns over the last three years.
Category average alpha, according to Value Research, was 1.15% for mid-cap funds and 2.89% for small-cap funds. This higher average for small-cap funds suggests they generally generated more excess return over benchmarks. However, individual fund performance varies significantly within these averages.
Investors in India examining these categories should scrutinise specific fund alpha figures to understand true benchmark-adjusted returns. This data helps assess fund manager efficacy.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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