The question
Large-cap investors have a well-known problem: it is hard for an active fund to beat the index. Mid and small caps are said to be different, because there are more companies for a manager to choose among. Here is what the Direct-plan numbers say to 1 October 2026.
All figures are Direct plan, Growth option, excluding ETFs. One-year and three-year returns are annualised (CAGR) and the numbers in the table are medians.
The comparison
| Funds | 1 year | 3 years (a year) | 3-month | Worst 3-year fall | |
|---|---|---|---|---|---|
| Active mid cap | 34 | 4.61% | 15.37% | −3.26% | −21.23% |
| Nifty Midcap 150 index funds | 15 | 2.23% | 12.82% | −5.06% | −21.08% |
| Active small cap | 36 | 12.41% | 14.64% | +1.52% | −24.14% |
| Nifty Smallcap 250 index funds | 11 | 4.32% | 12.77% | −1.17% | −26.17% |
Not every fund has a full record, so the one-year column covers 31 active and 13 index mid-cap funds, 31 active and 10 index small-cap funds. The three-year column covers 29 active and 7 index mid-cap funds, and 24 active and 6 index small-cap funds. Index funds in these two segments are young; five-year records exist for only a handful, too few to compare.
How many active funds beat the index fund?
Against the median index fund in each segment:
| Segment | Beat over 1 year | Beat over 3 years |
|---|---|---|
| Mid cap | 25 of 31 | 23 of 29 |
| Small cap | 27 of 31 | 17 of 24 |
In mid caps, roughly four in five active funds were ahead over both windows. In small caps, the one-year gap is very wide (12.41% against 4.32% for the medians) and three-year narrower (14.64% against 12.77%), with 7 of the 24 funds behind.
The spread is the other half of the story
| Lowest 3-year | Highest 3-year | |
|---|---|---|
| Active mid cap | 9.24% | 21.83% |
| Midcap 150 index funds | 12.73% | 13.07% |
| Active small cap | 9.68% | 23.17% |
| Smallcap 250 index funds | 12.60% | 13.16% |
Index funds in a segment are almost interchangeable: seven mid-cap index funds with a three-year record sit within 0.34 points of each other. Active funds in the same segment span more than 12 points. Roughly three-quarters of active funds beat the index fund median, but the weakest finished 3.6 to 3.1 points behind it. The middle of the active pack is ahead; the choice of fund still matters a great deal.
Caveats that matter
Survivors. Funds that were merged away or closed do not appear in a table of today's funds. That tilts active medians upward, and by an unknown amount.
Different windows. Index funds with a three-year record launched around the start of that window, and the active funds include older ones. The comparison is of what is on sale today, not a controlled test.
The recent quarter went the other way. In the last three months the active small-cap median was ahead of the index funds (+1.52% against −1.17%), but in mid caps both fell, and the active median fell less (−3.26% against −5.06%).
Falls are similar. The median worst three-year fall was almost identical in mid caps (−21.23% active, −21.08% index). In small caps active funds fell less (−24.14% against −26.17%). Neither route avoids the drawdown.
Costs. An index fund's edge is its fee. For the median expense ratios by category, see this month's cost comparison.
Where to read more
The category pages for mid-cap funds and small-cap funds have the full one-, three- and five-year tables. The general case for and against index funds is in active vs passive investing over the long run. This is a description of past NAVs, not a recommendation.
Frequently asked questions
Do active mid-cap funds beat mid-cap index funds?
In this data, mostly. To 1 October 2026, 25 of 31 active mid-cap funds beat the median Nifty Midcap 150 index fund over one year (2.23%), and 23 of 29 beat it over three years (12.82% a year). The median active fund returned 4.61% and 15.37%.
And in small caps?
27 of 31 active small-cap funds beat the median Nifty Smallcap 250 index fund over one year (4.32%), and 17 of 24 over three years (12.77% a year). The active median was 12.41% and 14.64%.
Why are index funds' returns so close to each other?
They all copy the same index, so the gap between them is only costs and tracking. Among Direct-plan Midcap 150 index funds, three-year returns ran from 12.73% to 13.07% a year. Active mid-cap funds ran from 9.24% to 21.83%.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are as of the dates stated and can be revised by their source.
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