Market Experts Advise Investing in Mid-Cap Funds Through SIP

Financial experts recommend that investors shift focus toward mid-cap stocks using the systematic investment plan route to build wealth over the medium to long term. Current market conditions face pressure from higher oil prices, a weak rupee, rising US bond yields, and foreign capital outflows. Despite these challenges, recent pullbacks in mid-cap stocks have created attractive entry levels in a category that balances growth and stability.

Historical Returns and Fund Performance

Several mid-cap mutual funds have delivered strong historical returns over the past few decades. For instance, the Nippon India Growth Mid Cap Fund launched in 1995 and has never dropped below its face value of 10 over the last three decades, delivering a compound annual growth rate of close to 22 percent. Over the past five years, the top three funds in this category all posted returns exceeding 20 percent, led by the Nippon India Growth Midcap Fund at 22.62 percent, followed by Edelweiss at 21.30 percent and the HDFC Midcap Fund at 21.12 percent. Additional funds show strong long-term performance, with the HDFC Mid Cap Fund returning 17 percent annually since 2007, the SBI Midcap Fund delivering 16 percent since 2005, and both the Kotak Mid Cap Fund and Edelweiss Mid Cap Fund returning 14 and 13 percent respectively as of October 9, 2026.

Expert Insights and Retail Trends

Pankaj Mathpal, founder of Optima Money, notes that mid-cap funds frequently outperform large-cap benchmarks because mid-sized companies often trade at reasonable valuations before institutional investors discover them. G Chokkalingam, head of research at Equinomics Research, points out that new retail investors entering the market at a rate of 5 to 7 lakh per week primarily focus on small and mid-cap stocks, driving continued outperformance. V K Vijayakumar, chief investment strategist at Geojit Investments, adds that mid-caps grow faster than large-caps due to under-researched business segments, though he advises using SIPs rather than lump-sum investments to avoid peak valuations.

Context

Systematic investment plans allow investors to buy mutual fund units in regular installments, which helps average out purchase costs over time during market ups and downs. Mid-sized companies often offer higher growth potential than large, mature corporations because they have more room to expand their operations and market share.