New Delhi, July 30 -- Mid-cap mutual funds are often considered a middle ground between large-cap and small-cap funds. These schemes invest mainly in medium-sized companies that are considered to have greater growth potential than established large-cap companies, while carrying relatively lower risk than small-cap stocks.

Under the Securities and Exchange Board of India (SEBI) categorisation norms, mid-cap funds are required to invest at least 65% of their assets in mid-cap stocks. Within these regulatory guidelines, fund managers can actively decide on portfolio allocation and stock selection.

One of the key metrics used to assess whether an actively managed fund has added value is alpha. It measures whether a fund manager has generate...