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Home»Investments»Mid-cap SIP edge: 10-year investments deliver up to 17% annual returns, outperforming large-caps; here’s what experts say
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Mid-cap SIP edge: 10-year investments deliver up to 17% annual returns, outperforming large-caps; here’s what experts say

November 3, 20253 Mins Read


Mid-cap SIP edge: 10-year investments deliver up to 17% annual returns, outperforming large-caps; here's what experts say

Investors looking to build long-term wealth through Systematic Investment Plans (SIPs) in mid-cap mutual funds should ideally stay invested for a decade, financial experts said, as the probability of earning double-digit returns is the highest over a 10-year horizon.A WhiteOak Capital study, reported ET, found that investors who stayed invested in mid-cap funds through SIPs for 10 years earned an average annualised return of 17.4% — outperforming large-cap funds at 13% and small-cap funds at 14.8%.“Midcap funds can deliver alpha in equity portfolios with moderate risk. Investors can allocate around 40% to midcap funds but continue SIPs for a 10-year period,” said Juzer Gabajiwala, director at Ventura Securities.The study highlighted that over 10-year SIP periods, mid-cap funds delivered returns above 10% in 98% of cases, over 12% in 95%, and above 15% in nearly 79% of cases. In contrast, large-cap funds managed returns above 15% only 15% of the time, while small-cap funds exceeded that mark in 55% of instances.“Midcaps offer access to unique industries and emerging leaders not yet represented in the large-cap universe,” said Amar Ranu, EVP and head of investments at Anand Rathi Share and Stock Brokers, quoted ET. He also noted that the Nifty Midcap 150 Total Returns Index (TRI) has outperformed the Nifty 50 TRI by 10.1%, 4.7%, and 4.1% over 5-year, 10-year, and 15-year periods respectively.While valuations in the mid-cap space remain relatively high, they have cooled from last year’s peaks. The price-to-earnings (P/E) ratio of the Nifty Midcap 150 has dropped to 34.8x from 43.5x a year ago, according the ET report.Fund managers say mid-caps have continued to outperform due to a limited pool of investible stocks and relatively lower liquidity compared to large-caps. Under Sebi rules, mid-cap funds must invest in companies ranked between 101 and 250 by market capitalisation.However, some experts believe the segment still offers ample opportunities. “While overall mutual fund ownership as a percentage of free-float market cap has gone up, the 150-company space is not a constraint for midcaps,” said Ankit Jain, senior fund manager at Mirae Asset Mutual Fund. “Newer listings have provided more choices, ensuring enough diversity for fund managers.”Wealth advisors agree that investors with moderate risk appetite can benefit from disciplined 10-year SIPs in mid-cap funds, which continue to offer the potential for steady alpha generation over time.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)





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