The question
Large funds have more money to invest and more research behind them, but also more stock-picking constraints: a ₹20,000 crore small-cap fund cannot easily own a ₹500 crore company. So do bigger funds earn more or less than smaller ones in the same category?
We took 303 Direct plan, Growth option funds in nine diversified categories, each with an AMFI average assets figure for July–September 2026 (285 of them have a full year of NAV history), and split every category at its median size. The table shows the median return of the smaller half and the larger half. Returns run to mid-October 2026, from daily NAVs; one-year figures are plain returns and three- and five-year figures are compounded annual rates. A fund younger than a period is left out of it, which is why the fund counts drop for longer periods. Closed-ended ELSS series, which no longer take money, are not counted.
Category by category
| Category | 1 year: smaller half | 1 year: larger half | 3 years: smaller | 3 years: larger | 5 years: smaller | 5 years: larger |
|---|---|---|---|---|---|---|
| Small cap | 16.07% | 9.39% | 15.63% | 13.84% | 15.29% | 14.05% |
| Mid cap | 5.39% | 2.30% | 15.50% | 15.36% | 12.79% | 13.92% |
| Multi cap | 4.20% | 3.87% | 13.85% | 12.85% | 11.48% | 12.68% |
| Large & mid cap | -0.01% | -1.22% | 11.89% | 12.83% | 10.02% | 11.37% |
| Focused | 0.38% | -1.63% | 10.62% | 11.46% | 10.47% | 9.76% |
| Flexi cap | 0.01% | -2.67% | 10.97% | 12.27% | 9.20% | 8.97% |
| ELSS | -2.75% | -3.75% | 8.77% | 10.25% | 8.36% | 9.24% |
| Value | -1.36% | -0.60% | 10.54% | 12.27% | 10.04% | 11.62% |
| Large cap | -4.04% | -6.42% | 9.15% | 8.55% | 7.63% | 7.39% |
Read across the rows and the answer changes with the period:
- One year: the smaller half is ahead in 8 of 9 categories. Value is the exception.
- Three years: the larger half is ahead in 5 of 9 (large & mid cap, flexi cap, focused, ELSS and value), the smaller half in the other four.
- Five years: the larger half is ahead in 5 of 9 (mid cap, multi cap, large & mid cap, ELSS and value), the smaller half in the other four.
There is no single direction. The one-year pattern is the most one-sided, and it is also the shortest period, so it is the one most likely to be a feature of the last twelve months rather than of size.
The same cut by size band
Pooling the nine categories into four absolute size bands, as in our note on size and cost, gives:
| Average assets | Funds | 1-year median (funds) | 3-year median (funds) | 5-year median (funds) |
|---|---|---|---|---|
| Under ₹500 crore | 49 | 0.65% (37) | 10.48% (28) | 8.93% (21) |
| ₹500–2,000 crore | 62 | 0.23% (58) | 11.27% (48) | 9.57% (31) |
| ₹2,000–10,000 crore | 109 | 0.83% (107) | 12.50% (92) | 10.33% (69) |
| Above ₹10,000 crore | 83 | -2.05% (83) | 11.66% (83) | 11.37% (77) |
The largest funds had the weakest year (-2.05%) and the best five-year median (11.37% a year). Pooled bands mix categories, though, and categories had very different years, so the category-by-category table above is the fairer comparison.
Why the five-year column needs care
The smaller halves have few funds with a five-year record, because small funds are often young. In multi cap the smaller half has 2 funds with five years of history against 7 in the larger half; in mid cap it is 6 against 16; in small cap 6 against 15. A median of two funds is close to an anecdote. Funds that were merged away or closed over five years are not in today's list either, which flatters whichever group lost more of them. Our scorecard of equity categories shows the whole-category picture, and the notes on mid cap and small cap funds list every fund with its record.
What this does and does not show
Size is not a signal in either direction. A larger fund beat its smaller peers in some categories and periods and trailed in others. If anything, the data say that choosing a fund by its size alone is no better than choosing by its name.
A split at the median is crude. It puts a ₹1,900 crore mid-cap fund in the "smaller" half and a ₹2,100 crore one in the "larger". The bands above are the other way to cut it.
Past returns do not carry forward, and flows follow performance, so a fund can be large because it did well.
None of this is a recommendation to buy or sell any fund. To see where a fund sits among peers on size, cost and return together, use the screener.
Frequently asked questions
Do larger equity funds earn higher returns?
Not consistently. Splitting nine equity categories at their median size, the smaller half had the higher median one-year return in 8 of 9 categories, the larger half had the higher three-year return in 5 of 9, and the larger half had the higher five-year return in 5 of 9. Fund size is not a reliable guide to which half does better.
Which categories show the biggest gap between small and large funds?
Over one year, small cap: the smaller half returned a median 16.07% against 9.39% for the larger half. Over three years, value and ELSS, where the larger half was ahead by about 1.7 and 1.5 points a year. Over five years, value again: 11.62% a year for the larger half against 10.04% for the smaller.
What does the sample cover?
Direct plan, Growth option funds in nine diversified categories with a filed July–September 2026 average AUM and an expense ratio under 3%, leaving out closed-ended ELSS series: 303 funds, of which 285 have a one-year return. Returns are to mid-October 2026 and are annualised beyond one year. Funds younger than the period are left out of that period.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
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