Mid caps funds score over Large cap: Crisil Research

Highlighting an interesting trend, a recent CRISIL Research study reveals that mid-cap equities have outperformed the generally preferred (more liquid) large-caps. The study on the returns and volatility of large-cap and mid-cap equity indices showed that mid-caps not only provided higher returns over longer time frames, but were also less volatile. The study was extended to mutual funds as well, and reported similar results.

Performance analysis

CRISIL Research analysed the performance of the CNX Nifty Index (large-cap index) and CNX Midcap Index (mid-cap index) over a 10-year period until March 2013. The CNX Midcap Index gave 23% annualised returns over this period, while the CNX Nifty Index returned 19%. Volatility measured by standard deviation (a risk measure) for the CNX Midcap Index was lower at 25% compared to 26% for the CNX Nifty Index. A longer timeframe is a better reflection of the trend, as it incorporates multiple market cycles. Even over other periods of analysis - three, five and seven years - the mid-cap index was less volatile.

 

 

 

 

 

*As on March 28, 2013
*Returns and risks are annualised, risk measured by standard deviation
# Inception of the CNX Midcap Index is January 1, 2001
Higher returns and lower risk for a given period are highlighted in colour

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