DSP Mutual Fund has broadened its passive investing suite with the launch of four new index-linked schemes focused on India’s fast-growing midcap and small-cap segments. The fund house has rolled out the DSP Nifty Midcap 150 Index Fund, DSP Nifty Midcap 150 ETF, DSP Nifty Smallcap 250 Index Fund and DSP Nifty Smallcap 250 ETF, strengthening its presence in the country’s increasingly popular passive investment space.
The new offerings mirror the Nifty Midcap 150 and Nifty Smallcap 250 indices, which capture companies ranked 101–250 and 251–500, respectively, within the Nifty 500 universe. These indices allow investors to diversify beyond large caps and tap a broader section of India’s corporate landscape.
Historically, midcap and small-cap indices have rewarded investors who remained invested for long periods. Based on data analysed as of October 31, 2025, the Nifty Midcap 150 TRI generated average 10-year rolling returns of 16.2%, significantly higher than the Nifty 500 TRI’s 12.6% over the same horizon. The Nifty Smallcap 250 TRI delivered average rolling returns of 13.5%. However, both segments have also seen sharper drawdowns during volatile phases, underscoring the importance of long-term holding periods to smooth out risk.
The composition of these indices highlights the breadth of opportunity they offer. The Smallcap 250 Index includes companies from industries with limited representation in large-cap benchmarks, such as industrial products, capital markets, healthcare equipment, textiles and building materials. The Midcap 150 Index, by comparison, offers exposure to more established businesses with relatively stable earnings trajectories and stronger balance sheets.
DSP Mutual Fund noted that the indices have low overlap with portfolios of active funds in their categories. The Midcap 150 shares only 32% of its constituents with actively managed midcap schemes, while the Smallcap 250 overlaps just 18% with active small-cap funds. According to the fund house, this makes the new index offerings complementary to existing active allocations, enabling investors to blend both approaches for more diversified exposure. The New Fund Offers (NFOs) are open for subscription from November 24 to December 8.
Anil Ghelani, Head of Passive Investments & Products at DSP Mutual Fund, said the schemes are designed to provide investors a rules-based, disciplined route to participate in the midcap and small-cap universe. He added that the funds aim to replicate their respective total return indices subject to tracking error, and reminded investors that past index performance does not predict future results.
Other launches from DSP
Earlier this month, DSP also unveiled the DSP MSCI India ETF, aimed at giving investors efficient access to India’s long-term growth story through a basket of large- and mid-cap companies. The ETF tracks the MSCI India Index, a widely followed benchmark that covers key sectors including financials, technology, energy and consumer. The launch comes at a time when foreign institutional ownership in Indian equities has pulled back, with cumulative outflows of around Rs 1.4 trillion since late 2021, even as global sentiment toward India has begun to improve.
Gurjeet Kalra, Business Head – Passive Investments at DSP, said the ETF is particularly attractive for offshore investors and NRIs due to its favourable tax structure, as dividends and portfolio rebalancing inside the fund are not immediately taxable—unlike many offshore ETFs. This, he said, enhances post-tax return potential for investors seeking efficient exposure to Indian equities.
Ghelani added that the MSCI India Index has remained a preferred benchmark for global investors looking to participate in India’s economic expansion. With a 27-year CAGR of 14%, the benchmark has demonstrated strong resilience across market cycles. The ETF, he said, brings this globally recognised index to domestic investors in a transparent, low-cost format, offering broad diversification across India’s evolving equity market.
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