Quant Mid Cap Fund beats benchmark in short term after years of lag: Expert explains what investors should do

Quant Mid Cap Fund has staged a notable short-term comeback, outperforming its benchmark index over the last 3 and 6 months, according to the July 2026 factsheet. However, the fund has underperformed the benchmark over the last 1, 3 and 5 years.

Here's what an expert has to say about this turnaround and how investors can distinguish a genuine recovery from a temporary rebound.

*CAGR Returns as on 30 June, 2026, Direct Plans, Source: Quant Mutual Fund Factsheet

Just like its performance against the benchmark, the Quant Mid Cap Fund has outperformed the category average in the last few months but lagged over the longer term.

*CAGR Returns as on 7 July, 2026, Direct Plans, Source: Value Research

“Quant Mid Cap Fund's relatively weaker performance over the last 1, 3 and 5 years appears to be largely driven by stock selection and portfolio positioning,” said Bharath Rathore, Executive Director, Anand Rathi Wealth.

He noted that Quant AMC is known for a high-conviction and high portfolio turnover approach, frequently reshaping the portfolio based on its investment framework.

“Such a strategy can underperform when market trends do not favour the fund's positioning, but it also has the potential to generate strong alpha when those positions begin to play out,” he said.

According to him, the fund has reduced exposure to Reliance Industries over the past year while increasing conviction in stocks such as Tata Communications and Aurobindo Pharma. Healthcare, basic materials and technology have also emerged as key contributors to 6-month performance.

He added that a fund manager change in February 2025 may also have contributed to the transition phase.

Rathore said investors should consider reducing exposure only if mid caps have become an outsized portion of the portfolio, such as 70% to 80% of the equity allocation.

He added that investors can exit a fund only if underperformance persists across multiple market cycles, there is a change in the fund manager or investment philosophy, or peers consistently deliver better risk-adjusted returns.

“Investors should avoid making entry or exit decisions based on recent returns, as this often leads to buying high and selling low,” he noted.

“Recent performance alone should never be the basis for judging whether a mid-cap fund has genuinely recovered,” Rathore said.

He advised investors to look beyond short-term returns and focus on consistency in rolling returns, sustained alpha generation over the benchmark, improvements in portfolio quality, and stronger risk-adjusted performance through metrics such as the Sharpe ratio and Jensen's Alpha.