Equity fund beta: 199 of 275 move less than their index

The number

The median diversified equity fund had a beta of 0.96 over the three years to September 2026. Of 275 funds, 199 had a beta below 1, meaning they moved less than the index they are measured against, and 76 moved more. Eleven reached 1.10.

Beta compares a fund's monthly returns with its benchmark's. A beta of 0.95 means that, on average over the period, the fund rose or fell 0.95% for each 1% move in the index. Ours uses the 36 completed months from October 2023 to September 2026, against the total return version of each category's index. The funds are Direct plan, Growth option, open-ended, with sectoral and thematic funds left out; a fund needs at least 30 months of returns to have a figure.

By category

Contra funds (3) are left out for size; their median was 1.00. One ELSS fund, an index-tracking one, is measured against the Nifty 50 TRI.

Most categories sit between 0.91 and 0.96, a little under their index. Multi cap funds, which must hold at least a quarter each in large, mid and small companies, and large & mid cap funds are the exceptions, both at 1.00.

Why small caps look low

Small cap funds, 0.86. They move less than the Nifty Smallcap 250, partly because they can hold some larger companies and cash, and small cap funds held more cash than most categories on the latest disclosures (see cash levels in equity funds). Their downside capture is also the lowest of any category, as our capture ratio post found.

Large & mid cap funds show how much the yardstick matters. Until 7 October 2026 this site measured them against the Nifty Midcap 150 TRI, an index with no large companies in it, although SEBI requires them to hold at least 35% in large caps; on that basis their median beta was 0.84. Against the Nifty 500 TRI, which covers both halves of the mandate, it is 1.00. Our alpha post shows the same change in their alpha.

That is the general rule for reading beta: it describes a fund against one index, and against a different index the same fund would have a different beta.

The lowest and highest

The first five are the lowest betas and the last five the highest. Quantum Small Cap launched in November 2023, so its figures cover a little under three years.

Two fund houses account for much of the high end. Quant has four of the ten highest betas (its value, focused, large & mid cap and flexi cap funds, at 1.11 to 1.20), and ITI and Motilal Oswal two each. Parag Parikh has two of the three lowest.

Low beta, smaller falls

Among the 180 funds measured against the Nifty 500 TRI that have a three-year record, splitting them into quarters by beta gives:

The higher-beta funds fell further at their worst, and also returned more. Over a period in which most funds made money, the ones that moved more than their index tended to gain more as well as fall further. In a falling stretch, a high beta works the other way.

What this does not tell you

R² says how far to trust it. Beta is only meaningful when the index explains most of a fund's moves. Motilal Oswal's ELSS and focused funds had the lowest R² of the 275, at 0.68, so their betas say less than most. The guide to alpha and beta treats an R² above about 0.85 as a good fit.

It is an average over 36 months. A fund's beta in a sharp fall can differ from its beta over three years.

Low beta is not low risk. Axis Small Cap's beta of 0.76 still came with a worst fall of 19.4%, because the index it is measured against is a volatile one.

It is not a recommendation. A fund's beta describes how it behaved, not whether to buy or sell it.

Where to go from here

The low-beta screen lists equity funds with a beta under 0.85 and a three-year return above 12%. Each fund's page shows its beta and alpha against its own benchmark. Our Sharpe ratio post looks at return per unit of risk across the same categories.