Mid-cap investments: Mid-cap Play: SIPs of 8+ years gave profits, show past data

Mumbai: Investors looking to put money in mid-cap funds through Systematic Investment Plans (SIPs) and do not want to risk losing capital might need a minimum time frame of eight years, if past data are to go by. A study by asset valuation analytics firm Valuemetrics Technologies on monthly rolling returns for SIPs between April 2005 and March 2025 in the Nifty Midcap 150 Total Returns Index showed such investments made for three and five years have incurred losses (see table).

SIPs made in this index for 8 to 15 years in this time frame have made money. In comparison, for an investor to be sure that her small cap index SIP investments did not lose money in this period, she had to continue for at least 12 years.

Historically, returns from midcaps have tended to be lower compared with small-cap, but the risks of investing in this segment have also been lower.

For instance, the highest return made in a three-year SIP in the Nifty Midcap 150 TRI in these 20 years was 37.5% on an annualised basis, lower than 42.1% in Nifty Small Cap 250 Total Returns Index.

The value of three-year SIPs in the mid-cap index eroded by as much as 63% in the worst-case scenario in this period, while for small caps it is slightly higher at 64.7%, the study showed.

Investors lost 8.2% on an annualised basis in a 5-year SIP in the mid-cap index, but if the SIP continued for a tenure of eight years, the minimum return increased to 1.7%. Investors who continued doing SIPs in Nifty Midcap 150 TRI for 8, 10, 12 and 15 years did not lose money at all, according to the study.”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.The Association of Mutual Funds in India classifies mid caps as companies ranked between 101and 250 by market capitalisation.

Since September 25, when the Nifty Mid cap 150 hit a peak, the index is down 14.45% as against the 13.7% decline in the Nifty Small Cap 250. The value of SIP investments in the Nifty Midcap 150 is down 7.5%. The value of such staggered investments in the Nifty 50 is down 1% in the same 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.

(ET’s March 25 edition published a similar analysis on small-cap funds)