HSBC Midcap Fund has emerged as the top-performing equity fund over the last three years, delivering a CAGR of 24.13%. A monthly SIP of ₹10,000 in the scheme since its inception in August 2004 would have grown to over ₹2 crore.
Launched on August 9, 2004, has received a five-star rating from Value Research and a four-star rating from Morningstar.
Fund beats benchmark and category across time periods
The scheme has outperformed both its benchmark and category average across different investment horizons based on trailing returns.
Over the last three months, the fund delivered 8.01%, compared with 3.91% from its benchmark and 6.53% from the category average.
Over six months, it generated 19.83%, against 7.98% for the benchmark and 10.27% for the category. Its one-year return stood at 22.73%, compared with 9.97% for the benchmark and 9.59% for the category.
Over three years, the fund delivered 24.13%, significantly higher than the benchmark return of 16.64% and category average of 16.59%.
Over five years, it generated 18.36%, compared with 17.06% for the benchmark and 15.15% for the category. Since its inception, the scheme has delivered a CAGR of 18.36%.
Fund sees strong gains in several calendar years
The scheme’s yearly returns have varied considerably over the past decade. It declined 12.03% in 2018, 0.15% in 2019 and 1.35% in 2025.
On the other hand, it delivered exceptionally strong returns in several years, gaining 52.33% in 2017, 40.01% in 2023 and 39.73% in 2024.
The fund also generated returns of 30.39% in 2021, 19.05% in 2020, 9.79% in 2016 and 1.07% in 2022.
Bottom-up stock picking drives performance
According to experts, follows a bottom-up approach to stock selection, focusing on businesses that have the potential to deliver sustainable earnings growth over the long term.
Experts noted that a significant portion of the fund’s recent outperformance occurred in 2023 and 2024, when it generated returns of around 40% in each year.
The fund manager’s ability to identify stocks in sectors that performed strongly has also supported recent returns. The scheme delivered about 22.8% compared with roughly 9.6% for the Nifty Midcap 150, translating into an active return of nearly 13.2%.
How did the SIP perform?
A monthly SIP of ₹10,000 over the past three years would have grown to ₹4.72 lakh, generating an XIRR of 19.55%.
Over five years, the same monthly investment would have accumulated ₹10.21 lakh, with an XIRR of 22.05%. Over 10 years, the investment would have grown to ₹31.65 lakh, generating an XIRR of 18.68%.
A lump-sum investment made at the time of the fund’s inception would now be worth ₹47.67 lakh, representing a 19.12% CAGR.
The same lump-sum investment made three years ago would have grown to ₹1.91 lakh, with a CAGR of 24.18%. An investment made five years ago would now be worth ₹2.31 lakh, generating a CAGR of 18.26%.
Over 10 years, the same investment would have grown to ₹4.72 lakh, delivering a CAGR of 16.80%.
Experts said long-term investors should view HSBC Midcap Fund’s recent performance in the context of the broader mid-cap rally. The mid-cap segment has risen by around 28% since April 2025 and by nearly 19% since the March 2026 correction.
While the HSBC Midcap Fund has outperformed several peers, other schemes have also generated returns of more than 20% over the three-year period.
Experts cautioned that recent outperformance should not automatically be extrapolated into the future. Mid-cap funds have benefited from the recent market rally, contributing to their strong long-term returns.
Investors should also consider the possibility of mean reversion, where funds that outperform for a period may subsequently deliver relatively weaker returns.