According to a study by Abakkus Mutual Fund, the large & mid-cap category has historically delivered a balance between returns and volatility. Over the past 5 years, the benchmark index gave 14% returns, compared with 10% for large-caps and 18% for mid-caps. The study compares the performance of the Nifty 100 TRI, Nifty Large Midcap 250 TRI, and Nifty Midcap 150 TRI, which can be considered broad proxies for large-cap funds, large & mid-cap funds, and mid-cap funds respectively. The large & mid-cap category has consistently ranked between large-cap and mid-cap funds across different market cycles, while historically outperforming large-cap funds over every investment horizon analysed.
Over the past one year, the Nifty Large Midcap 250 TRI gave 3% return, compared with 6% for the Nifty Midcap 150 TRI. However, the Nifty 100 TRI fell 1% in the last one year. The gap became more visible over longer investment periods, with the large & mid-cap index delivering 16% return over three years, compared with 11% for the large-cap index and 21% for the mid-cap index. Over 10 years, the large & mid-cap index returned 16%, higher than the 13% recorded by the large-cap index but below the 18% generated by the mid-cap index. Recent developments show that 12 mid-cap mutual fund schemes have delivered over 18% annualised returns for SIP investors over the past 10 years, beating most FDs and large-cap funds comfortably.
The study also compares annualised standard deviation, a widely used measure of volatility that indicates how much returns fluctuate around their average. Across all investment horizons, the large & mid-cap index recorded lower volatility than the mid-cap index, while remaining slightly above or in line with the large-cap index. Over the one-year period, both the Nifty 100 TRI and Nifty Large Midcap 250 TRI indices recorded a standard deviation of 15%, compared with 16% for the Nifty Midcap 150 TRI. During the three and five-year periods, the large & mid-cap index maintained a 15% standard deviation, compared with 14% for the large-cap index and 17% for the mid-cap index.
The return profile of the large & mid-cap category improved over longer investment periods. The Nifty Large Midcap 250 TRI gave 3% returns over one year, 16% over three years, 14% over five years, and then again 16% over a 10-year period. Its volatility remained relatively stable over time, with annualised standard deviation largely staying around 15-16% across different investment horizons. However, actual fund performance may vary from the underlying indices, as noted in the study. Recent analysis shows that funds that topped 3-year return charts often underperformed over 10 years, emphasizing the importance of consistent long-term performance over short-term gains.
