Aiming good returns from SIP, do not ignore mid cap funds

Written on Friday, December 11, 2015
By Kumar Pushpraj

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If we take a look at the performance of funds in mid cap and large cap space, definitely mid-caps have outperformed large caps over a period of time. If growth and wealth creation in on your mind, you cannot choose to ignore a substantial inclusion of mid cap funds in your investment portfolio. While blue chips have underperformed, mid-caps have given returns way ahead of large cap funds.


If we see the trend of past three years, Mid-cap index at BSE has received a substantial gain of 17%, while the Sensex witnessed a rise of 10.59 %. According to our internal research at Bajaj Capital, mid-cap funds have constantly outperformed large caps in last 10 years. SBI magnum equity fund gave an annual return of 14.89% in large cap and 20.29% in flexi cap, but the same fund has given a whooping return of 34.71% over last few years. Let’s have a look at the performance comparison of some leading funds. The below mentioned table show the comparison of various categories on monthly Systematic Investment Plan (SIP) for tenures like 04 Jan 2011 to 04 Dec 2015 (3 Years) and Investment amount Rs. 5000/PM (Rs. 300000). 


The research has been based on past performance and may not prevail in future. Not to be used as sole criteria for fund decision. 


The comparison clearly shows the yield of investors who had systematic investment plans (SIPs) in midcap equity mutual funds higher than schemes focused on large caps and Flexi cap Funds over the past five years. However, over the last year, the valuation gap between large and midcap stocks has contracted. The Midcap Index's price to earnings ratio, which was at 16.77 in December 2014, has risen to 21.32, while the Nifty's price to earning ration has reduced marginally from 21.81 to 21.51.


Including mid-cap exposure in an overall portfolio allocation is a proven diversifier for increasing returns while minimizing risk given its favorable risk-reward characteristics.


#Mutual Fund investments are subject to market risk. Read all scheme related documents carefully before investing. The above presented data is just to show case the fund comparison and is not necessary a recommendation.



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