Nifty 50 vs Nifty Midcap 150 - Part 1

The Nifty 50 index monitors the 50 largest companies by market capitalization and is often regarded as the most stable investment within the equity mutual fund sector. The Nifty Midcap 150 index, introduced in April 2016 with a base date of April 1, 2005, tracks 150 companies ranked between 101 and 250 in terms of market capitalization. This blog aims to compare the performance of these two indices based on overall returns, rolling returns, and SIP returns across various time periods.

Table 1: Point to Point and SIP Returns

Index	Point to Point Returns	Monthly SIP Returns
Nifty 50 TRI	14.2%	12.7%
Nifty 150 TRI	17.2%	17%

If an individual had initiated a Systematic Investment Plan (SIP) in both indices on April 1, 2005, by April 2025, the Nifty 150 would have yielded a corpus 70% higher than that of the Nifty 50. Over this 20-year period, the overall returns of the Nifty 150 TRI have significantly outperformed, largely due to the midcap bull run since 2020. Let us examine the annual performance and the maximum drawdowns of each index:

Table 2: Annual Returns and Drawdown

Year	Annual Returns	Max Drawdown
Nifty 50	Nifty 150	Nifty 50	Nifty 150
2006	43.4%	28.5%	-6.8%	-17.3%
2007	55.2%	75.9%	-10.4%	-14.7%
2008	-51.3%	-64.9%	-58.6%	-70.2%
2009	77.6%	113.9%	-58.5%	-72.9%
2010	19.2%	20.1%	-9.2%	-4.4%
2011	-23.6%	-31.2%	-27.2%	-39.1%
2012	29.1%	47.2%	-23.9%	-31.8%
2013	8.1%	-1.3%	-10.0%	-21.9%
2014	32.9%	62.7%	-5.6%	-11.0%
2015	-3.0%	9.7%	-11.1%	-3.0%
2016	4.3%	7.5%	-21.7%	-18.4%
2017	29.2%	54.1%	-8.5%	-10.0%
2018	5.6%	-12.5%	-4.7%	-21.9%
2019	13.5%	0.6%	-9.3%	-24.4%
2020	16.1%	25.6%	-37.8%	-35.4%
2021	25.6%	48.2%	-2.5%	0.3%
2022	6.2%	4.7%	-16.4%	-21.1%
2023	20.7%	44.4%	-9.8%	-10.3%
2024	10.0%	23.8%	-2.4%	-0.6%
2025	NA	NA	-15.4%	-20.9%

 Note: Maximum drawdown considers maximum NAV of previous year and minimum NAV of current year, the period between the two could be more than 365 days also

Over the course of 19 annual periods, the Midcap 150 index has outperformed in 12 calendar years. However, the Nifty 150 index has experienced a greater maximum drawdown than the Nifty 50 in 14 out of 20 years. In instances where the Nifty 150 has a smaller drawdown compared to the Nifty 50, the difference is minimal. Conversely, in certain years where the Nifty 150's drawdown exceeds that of the Nifty 50, the disparity can be as large as 15%. This highlights the higher volatility associated with achieving greater returns. Nonetheless, it is important to note that maximum drawdown considers only two extreme points and does not provide a comprehensive view.

Rolling Returns

Rolling returns evaluate multiple data points based on the selected period, offering an unbiased perspective on fund performance. We will examine 1-year, 3-year, and 5-year rolling returns.

Table 3: One Year Rolling Returns

	April ‘05 to April ‘10	April’10 to April ‘25	April ’15 to April 20	April ’20 to April’ 25
% of time Nifty 50 provides higher return	63%	55%	36%	15%

I was surprised to see that even in the one year rolling returns, Midcap 150 has done better than Nifty 50 since April 2015.

If we take 3 year rolling returns from April 2005 to April 2025, Nifty 50 would have given higher returns only 34% of the time. If we further break the data, from April 05 to April 15, Nifty 50 would have given higher returns 51% of time, this is mainly because for 3 year rolling returns, first return calculation point would be from April 08. This is the time when the markets had crashed and midcaps had taken a significant beating compared to large caps. However, from the period April 15 to April 25, Nifty 50 would have beaten Nifty 150 only 22% times.

If we take 5 year rolling returns from April 2005 to April 2025, Nifty 50 would have given higher returns only 25% of the time. Even in 2018 and 2019 when midcaps fell sharply, the 5 year rolling returns were higher due to the high growth achieved in 2015 and 2017. Overall the 3 year and 5 year rolling returns indicate Nifty Midcap 150 has a better chance of beating Nifty 50 over the same period.

Table 4: 5 Year Rolling Returns Distribution April 2005 to April 2025

	<0%	0-10%	10-15%	15-20%	>20%
Nifty 50	0.1%	28.7%	43.9%	23.5%	3.9%
Nifty 150	1.0%	21.0%	26.2%	19.9%	31.9%

Over a 5 year period, Nifty 150 has given negative returns only 1% of time as compared to 0.1% of Nifty 50m which is not a significant difference; whereas it provides higher than 20% returns almost 32% times, much superior than the 3.9% provided by Nifty 50 which means for the higher returns, risk of negative returns are low.

In the second part of this blog we will look at the SIP returns of both the index over multiple periods.

Note:

1. Source of data is AMFI, www.advisorkhoj.com and data analysis by Shwealth

2. The indices discussed here are in no way are recommendation for investment