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Motilal Oswal Midcap Fund Faces Deep One-Year Underperformance
Motilal Oswal Midcap Fund had an excellent year in 2024 but struggled over the following year.
Its one-year return was negative while the wider midcap benchmark gained.
However, over five years, the fund still performed better than its benchmark.
The fund owns a relatively small number of investments, so mistakes can have a bigger effect.
Its investment choices were not well matched to the market from mid-2025.
The manager responsible for most of its famous track record also stopped running the fund in January 2026.
New managers are changing the portfolio while investors are withdrawing money.
Existing investors are advised to monitor the fund rather than panic, while new investors should judge the new team separately from the old record.
The fund returned -3.29% over one year to August 2026, versus 7.19% for the Nifty Midcap 150 TRI.
Its five-year rolling return was 27.39%, outperforming the benchmark’s 22.30%.
A concentrated portfolio and unfavorable sector positioning contributed to a roughly 14% NAV decline over three months.
Niket Shah, who managed the fund from July 2020, moved to another Motilal Oswal Group role in January 2026.
The fund experienced about Rs 24.5 billion in outflows in January 2026 and Rs 7.43 billion in February.
- Who
- Motilal Oswal Midcap Fund, its new managers Ankit Agarwal and Varun Sharma, and former manager Niket Shah.
- What
- The fund has significantly underperformed its midcap benchmark over one year despite retaining a strong five-year record.
- Where
- The fund operates within India’s mutual-fund market.
- When
- The reported one-year and five-year returns were measured through the end of August 2026; the manager change occurred in January 2026.
- Why
- The article attributes the underperformance to concentrated and unfavorable positioning, a change in fund manager, and simultaneous redemptions and portfolio repositioning.
Reasons for Patience
Reasons for Caution
Short-term performance
Reasons for Patience
One poor year does not necessarily mean a sound investment strategy has failed, and the fund’s five-year rolling returns remain the best in its category.
Reasons for Caution
The fund ranked last among midcap schemes over the reported one-year period, with a 10.48-percentage-point gap against its benchmark.
Manager transition
Reasons for Patience
The Motilal Oswal investment philosophy has not formally changed, and the fund house indicates that its process is intended to be institutional rather than dependent on one person.
Reasons for Caution
Most of the fund’s notable historical performance was achieved under Niket Shah, who no longer manages it, so the past record may not represent the current team’s decisions.
Portfolio and investor flows
Reasons for Patience
The new team is repositioning the portfolio, and existing investors may benefit if portfolio quality improves and outflows stabilize.
Reasons for Caution
The concentrated portfolio was poorly positioned, while redemptions and falling markets reduced assets by about Rs 43.1 billion between November 2025 and February 2026.
Key facts
- One-year return
- -3.29% to the end of August 2026
- One-year benchmark return
- 7.19% for the Nifty Midcap 150 TRI
- Five-year return
- 27.39%, compared with 22.30% for the benchmark
- 2024 performance
- More than 66%, making it the best-performing equity mutual fund in India that year
- Assets under management
- Approximately Rs 10.5 billion four years earlier, rising to about Rs 380 billion and later standing near Rs 365 billion
- Largest monthly outflow
- Approximately Rs 24.5 billion in January 2026
- Manager change
- Niket Shah moved to a Motilal Oswal Group role in January 2026; Ankit Agarwal and Varun Sharma took over
Sources
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