A 10-year SIP in mid-cap MFs can deliver alpha returns
Mumbai: Investors looking to put money in mid-cap mutual funds through Systematic Investment Plans or SIPs should ideally have a 10-year horizon. This is because the probability of making at least 10-15% annualised returns from this category is the highest when held over a decade.
A study by Whiteoak Capital shows that investors who did a SIP for a 10-year period earned an average return of 17.4%, compared with 13% in large-cap funds and 14.8% in small-cap funds.
Wealth advisors recommend a sizeable allocation to mid-cap funds.
"Midcap funds can deliver alpha in equity portfolios with moderate risk. Investors can allocate 40% to midcap funds but do SIPs for a 10-year period," says Juzer Gabajiwala, director, Ventura Securities.
The study showed that over 10-year SIP periods, midcap funds delivered returns of over 10% in 98% of instances, over 12% in 95%, and above 15% in 79% of cases. In comparison, large-cap funds managed returns above 15% only 15% of the time, over 12% in 71%, and above 10% in 93% of instances.
Small-cap funds fared in between - delivering more than 10% returns in 87% of cases, over 12% in 78%, and above 15% in 55% of periods. Brokers said mid-caps tend to be better bets than large-caps in several cases.
"Midcaps offer access to unique industries and emerging leaders not yet represented in the large-cap universe," says Amar Ranu, EVP and head - Investments, Anand Rathi Share and Stock Brokers.
A study by Whiteoak Capital shows that investors who did a SIP for a 10-year period earned an average return of 17.4%, compared with 13% in large-cap funds and 14.8% in small-cap funds.
Wealth advisors recommend a sizeable allocation to mid-cap funds.
"Midcap funds can deliver alpha in equity portfolios with moderate risk. Investors can allocate 40% to midcap funds but do SIPs for a 10-year period," says Juzer Gabajiwala, director, Ventura Securities.
The study showed that over 10-year SIP periods, midcap funds delivered returns of over 10% in 98% of instances, over 12% in 95%, and above 15% in 79% of cases. In comparison, large-cap funds managed returns above 15% only 15% of the time, over 12% in 71%, and above 10% in 93% of instances.
Small-cap funds fared in between - delivering more than 10% returns in 87% of cases, over 12% in 78%, and above 15% in 55% of periods. Brokers said mid-caps tend to be better bets than large-caps in several cases.
"Midcaps offer access to unique industries and emerging leaders not yet represented in the large-cap universe," says Amar Ranu, EVP and head - Investments, Anand Rathi Share and Stock Brokers.
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