SIPs in mid-caps offer long-term gains: Study

Mumbai: On World Savings Day, systematic investment plan, or SIP, is seen as a suitable savings strategy at a time when returns on small savings schemes are becoming less attractive.

October 30 is celebrated as World Savings Day also known as World Thrift Day and this year's theme is, 'Savings can make all the difference".

In India monthly SIP contribution in mutual funds has grown from Rs 3,698 crore in September 2016 to Rs 12,976 crore in September 2022, making it a popular household savings and investment method among the informed population.

According to a study among the three market cap segments, the mid-cap segment is seen as a good investment option for investors preferring long-term investment.

An analysis of SIP investments over a long period of time by WhiteOak Capital AMC reveals that an average large-cap stock is generally less volatile than an average small-cap and mid-cap stock and provides stability to the portfolio. However, the small- and mid-cap segments may offer opportunities for potential higher growth in the long run.

Equities have proved to be a volatile asset class in the past. But, the study reveals that volatility is reduced if investments have a long-term horizon. So, it advises investors to invest via the SIP route with a long-term horizon.

The study, citing 26-year index data, also says that the contribution date of a SIP does not matter. Similarly, the frequency of a SIP investment—daily, weekly or monthly—also does not matter.