Midcap emerges as strong SIP option with 17.59% average 10-year return: WhiteOak Capital

Midcap SIPs have emerged as a compelling option for long-term investors, with the category delivering an average 17.59% return over 10-year rolling periods, according to a study by WhiteOak Capital Mutual Fund.

The study, which analysed long-period market index data, compared the performance of large-cap, mid-cap and small-cap segments to address a common question among SIP investors: where should they invest for the long term between large cap, mid cap and small cap?

The analysis covered 10-year monthly rolling XIRR returns from August 1996 to July 2026, with the first observation recorded on April 1, 2015. It found that the Nifty Midcap 150 TRI delivered an average return of 17.59%, compared with 13.01% for the Nifty 100 TRI and 14.96% for the Nifty Smallcap 250 TRI.


Also Read | Over Rs 1 crore invested in mutual funds, NPS, PPF and FDs: Should this PSU banker increase equity exposure with 18 years to retirement?

The mid-cap index also recorded a median return of 18.24%, higher than the 13.35% recorded by the large-cap index and 15.57% by the small-cap index. Over the period studied, mid-cap SIPs generated positive returns in 100% of the observations.

Mid-cap SIPs showed stronger consistency

The data showed that the Nifty Midcap 150 TRI generated returns of more than 10% in 98% of the observations and more than 12% in 96% of the observations. Returns exceeded 15% in 81% of the observations.

For the Nifty 100 TRI, 93% of observations generated returns above 10%, while 72% crossed 12%. Only 14% of the observations delivered more than 15%. The Nifty Smallcap 250 TRI generated returns above 10% in 88% of observations, above 12% in 79% and above 15% in 57% of observations.

The minimum 10-year rolling return was 5.93% for the mid-cap index, compared with 4.26% for the large-cap index and -0.46% for the small-cap index. The maximum return stood at 23.58% for mid-caps, 17.05% for large-caps and 22.38% for small-caps.

Should SIP investors switch to the best-performing category every year?

The WhiteOak Capital study also examined whether investors would benefit by changing their SIP allocation every year based on the previous year's best-performing market-cap segment.

In one case study, an investor started an SIP in the mid cap index and switched annually to the index that had performed the best in the previous year. This strategy generated an XIRR of 14.87% as of July 31, 2026.

In comparison, an investor who continued the SIP in the mid cap index without switching generated a higher XIRR of 17.06%.

The 10-year rolling analysis showed that the average XIRR for an investor who switched from the mid cap index based on the previous year's best-performing index was 15.77%, compared with 17.57% for an investor who continued with the mid cap index. The maximum returns were 22.79% and 23.50%, respectively, while minimum returns were 4.26% and 5.96%.

The study also examined an investor who started an SIP in the small cap index and switched annually based on the previous year's best-performing category. In this case, the switching strategy generated an XIRR of 14.82%, while continuing in the Small Cap Index generated 14.94%.

For the 10-year rolling periods, the average XIRR was 15.77% for the switching strategy and 14.94% for staying invested in the small cap Index. The maximum returns were 22.88% and 22.27%, respectively, while the minimum returns were 4.15% and -0.39%.

Also Read | Altiva Equity Long Short Fund to launch on September 10; Radhika Gupta explains its large-cap alpha strategy

The findings suggest that repeatedly moving between market-cap categories based on past performance does not necessarily result in better long-term outcomes. The fund house said that frequently changing lanes can be stressful and potentially harmful, and investors should focus on their ultimate financial goals by continuing their SIPs over the long term.

The broader SIP study also examined several other questions around systematic investing. WhiteOak Capital's analysis of BSE Sensex TRI data from August 1996 to July 2026 found that the probability of positive returns increased with the investment horizon.

For a three-year SIP, the study showed positive returns in 87% of observations, rising to 92% for five years and 100% for eight, 10, 12 and 15-year periods. The average return was 15.47% for three-year SIPs and 14.15% for 15-year SIPs.

The study also highlighted that investors cannot consistently predict market tops and bottoms. Its analysis found that although SIPs started at market bottoms could have a marginally higher percentage return, SIPs started at market tops could generate significantly higher absolute wealth over the long term because the investment period was longer.

For instance, a Rs 10,000 monthly SIP started at the January 2008 market peak would have invested Rs 22.30 lakh and grown to Rs 75.38 lakh by July 31, 2026, with an XIRR of 11.85%. A similar SIP started at the March 2009 market bottom would have invested Rs 20.90 lakh and grown to Rs 64.73 lakh, generating an XIRR of 11.84%.

SIP top-ups can accelerate wealth creation

The study also highlighted the potential benefits of increasing SIP contributions over time. A SIP top-up can be particularly useful for investors whose income is expected to rise or whose expenses may decline over time.

For a Rs 10,000 monthly SIP over 25 years, the study showed that the investor would have invested Rs 30 lakh and accumulated Rs 232.31 lakh at an XIRR of 13.87%. With a fixed annual top-up of Rs 1,000, the investment would rise to Rs 66 lakh and the final value to Rs 351.90 lakh, with an XIRR of 13.40%.

With a 10% annual variable top-up, the total amount invested would be Rs 118.02 lakh and the final value would reach Rs 456.44 lakh, with an XIRR of 13.12%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

If you have any mutual fund queries, message ET Mutual Funds on Facebook/Twitter. We will get them answered by our panel of experts. Do share your questions at ETMFqueries@timesinternet.in along with your age, risk profile, and Twitter handle.