Investing in mid-caps? SIPs for at least 8 years in mid-cap funds yield profits – check data
Planning to invest in mid-cap stocks? Based on historical data analysis spanning April 2005 to March 2025, individuals considering mid-cap fund investments via Systematic Investment Plans (SIPs) with capital preservation as a priority should maintain a minimum investment horizon of eight years.
According to an ET report, research conducted by Valuemetrics Technologies, examining monthly rolling returns of the Nifty Midcap 150 Total Returns Index, indicates potential losses for three and five-year investment periods.
The analysis demonstrates that SIP investments in this index maintained for 8-15 years consistently generated positive returns. In contrast, small-cap index SIP investments required a minimum 12-year commitment to ensure capital protection during the same period.
Nifty Midcap 150 TRI
Mid-cap investments have traditionally yielded lower returns compared to small-cap investments, whilst offering reduced investment risks.
The data reveals that three-year SIP investments in the Nifty Midcap 150 TRI achieved a maximum annualised return of 37.5% over the two-decade period, which was less than the 42.1% recorded by the Nifty Small Cap 250 Total Returns Index.
The research highlighted that three-year SIP investments in the mid-cap index experienced a maximum decline of 63% during challenging market conditions, whilst small-cap investments faced a marginally higher reduction of 64.7%.
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SIPs in the mid-cap index yielded negative returns of 8.2% annually over five years, but extended to eight years, returns improved to 1.7%. Analysis shows that SIPs in Nifty Midcap 150 TRI maintained for 8, 10, 12 and 15 years consistently generated positive returns.
“Many midcap companies have proven business ideas that are on a high growth track. Hence, they generally tend to have lower volatility than small caps, ” says Nikhil Gupta, Founder, Sage Capital.
According to the Association of Mutual Funds in India’s classification, mid-cap companies are those ranked between positions 101 and 250 by market capitalisation.
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From September 25, the Nifty Mid cap 150 has declined 14.45% from its peak, compared to a 13.7% fall in the Nifty Small Cap 250. SIP investments in Nifty Midcap 150 have decreased by 7.5%, whilst similar investments in Nifty 50 showed a modest 1% reduction during this period.
“Conservative investors could make a satellite allocation of 20-30% to established mid and small cap funds through SIPs, with a time frame of 8-10 years,” said Anup Bhaiya, Founder, Money Honey Financial Services.
(Disclaimer: Recommendations and views on the stock market given by experts are their own. These opinions do not represent the views of The Times of India)
