Large Cap, Mid Cap or Small Cap SIP - Which is better for long-term growth? | The Financial Express

Large Cap, Mid Cap or Small Cap SIP – Which is best for long-term growth?

10-year returns of the three indexes tracked by Large Cap, Mid Cap and Small Scap funds shows the index tracked by Mid Cap schemes has given higher minimum and maximum returns.

Large Cap, Mid Cap or Small Cap SIP – Which is best for long-term growth?
Small and Midcap (SMID) segments may offer many opportunities for potential higher growth. Representational image

While the Systematic Investment Plan (SIP) has emerged as the most favoured option for equity mutual fund investment, investors are often confused about the ideal scheme for long-term growth.

Growth or equity-oriented mutual funds come in three varieties – Large Cap, Mid Cap and Small Cap. A recent report suggests that Small and Mid Cap (SMID) segments may offer many opportunities for potential higher growth. However, 10-year SIP data shows Mid Cap funds may be a better investment option for investors seeking to invest for the long term.

“An average Large Cap stock is generally less volatile than an average Small and Midcap stock and provides stability to the portfolio. However, the Small and Midcap (SMID) segments may offer many opportunities for potential higher growth in the long run,” WhiteOak Capital MF said in its “SIP Report”.

“The study reveals that, among the three market cap segments, the midcap segment is a good investment option for investors seeking to invest via the long-term SIP route,” it added.

Source: WhiteOak Capital Mutual Fund

An analysis of the 10-year returns of the three indexes tracked by Large Cap, Mid Cap and Small Scap funds shows the index tracked by Mid Cap schemes has given higher minimum and maximum returns.

Nifty Midcap 150 TRI: Most Mid Cap funds track this index. In 10 years, this index has given a maximum SIP return of 21.4% and a minimum SIP return of 6%. The average SIP return of schemes tracking this index is 16.4% while the median SIP return is 16.5%.

Also Read: Small vs Multi vs, Mid vs Large vs Value vs Flexi vs Focussed Mutual Funds: 10-year returns compared

Nifty 100 TRI: Most Large Cap funds track this index. In 10 years, this index has given a maximum SIP return of 16.3% and a minimum SIP return of 4.3%. The average SIP return of schemes tracking this index is 12.4% while the median SIP return is 12.5%.

Nifty Smallcap 250 TRI: Most Small Cap funds track this index. In 10 years, this index has given a maximum SIP return of 20% and a minimum return of -0.4%. The average SIP return of schemes tracking this index is 13.4% while the median SIP return is 14.2%.

(Mutual Fund returns are subject to market risks. There is no guarantee or assurance that a fund fill repeat its past performance in future. Please consult your financial advisor before making any investment decision)

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First published on: 31-10-2022 at 16:22 IST