4 hrs ago
Experts Recommend SIPs for Mid-Cap Funds Amid Market Volatility
Experts say mid-sized companies may offer investors a chance for growth.
They believe some mid-cap companies can grow faster than bigger companies.
A recent fall in mid-cap share prices has made them look more attractive to some experts.
But prices can rise and fall, and the market also faces concerns about oil prices, the rupee and overseas investors selling shares.
One expert says mid-caps may do better than large-caps in the near term, while others emphasize their longer-term growth potential.
They also say some mid-cap companies get less attention from researchers.
Rather than investing all the money at once, one expert recommends putting in smaller amounts regularly through an SIP.
The article gives examples of funds with strong returns, but past returns do not ensure future results.
Experts say a recent pullback has made mid-cap stocks more attractive, despite market concerns including higher oil prices, a weak rupee and foreign capital outflows.
They describe mid-caps as offering a balance between growth and stability, and say some may grow faster than large-cap companies.
Pankaj Mathpal and G Chokkalingam say mid-caps could outperform large-caps over short-to-medium or longer periods, citing growth potential and investor flows.
V K Vijayakumar recommends investing through systematic investment plans (SIPs), warning that lump-sum investments at peak valuations can affect returns.
The article reports that Nippon India Growth Mid Cap Fund returned 22.62% annually over five years, compared with 21.30% for Edelweiss and 21.12% for HDFC Midcap Fund.
- Who
- Investment experts Pankaj Mathpal, G Chokkalingam and V K Vijayakumar.
- What
- They recommend considering mid-cap funds, particularly through the SIP route, while noting that investment timing can affect returns.
- Where
- India's stock market.
- When
- The recommendations are made amid current market volatility; the article also cites five-year fund returns.
- Why
- Experts cite mid-caps' growth potential, recent price pullbacks and retail investor participation, while market uncertainty makes the timing and method of investment important.
Reasons to consider mid-caps
Cautions on mid-cap investing
Return potential
Reasons to consider mid-caps
Pankaj Mathpal and G Chokkalingam argue that mid-caps may outperform large-caps because of growth potential, less-researched companies and retail investor interest.
Cautions on mid-cap investing
The article's experts do not dispute that potential, but V K Vijayakumar warns that returns can suffer if investors make lump-sum investments at peak valuations.
Investment method
Reasons to consider mid-caps
V K Vijayakumar says regular SIP investing is the ideal approach for seeking optimum returns in mid-caps.
Cautions on mid-cap investing
A lump-sum investment made at an unfavorable valuation may affect returns, so the article cautions against relying on that approach.
Key facts
- Recommended approach
- Consider mid-cap funds through systematic investment plans (SIPs), according to V K Vijayakumar.
- Market concerns mentioned
- Higher oil prices, rupee weakness, rising US bond yields and foreign capital outflows.
- Nippon India Growth Mid Cap Fund
- The article reports a 22.62% annualized return over the past five years.
- Edelweiss fund return
- 21.30% over five years, as reported in the article.
- HDFC Midcap Fund return
- 21.12% over five years, as reported in the article.
- Retail investor inflow rate
- G Chokkalingam says 5–7 lakh new retail investors enter capital markets each week.
- Nippon fund launch
- Nippon India Growth Mid Cap Fund launched in 1995, according to the article.
Quotes
V K Vijayakumar
Chief Investment Strategist at Geojit Investments
“Good mutual funds with strong research discover potential midcap winners, enabling them to deliver superior returns compared to large caps, in the long run. However, returns will be affected if investors make lump-sum investments in these funds at peak valuations. Therefore, the ideal strategy for optimum returns would be to invest in midcaps through the SIP route.”
livemint.com
“New retail investors continue to enter capital markets at the rate of 5 to 7 lakh per week. Retail investors largely focus on small and mid-cap stocks. This fact can cause continuity in the outperformance of small and mid-cap stocks over large caps. Thus, preference over small and mid-cap funds makes sense in the short term.”
livemint.com
Sources
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