DSP mutual fund launches new Nifty midcap and smallcap index funds and ETFs

DSP Mutual Fund today announced the launch of four new passive schemes - DSP Nifty Midcap 150 Index Fund, DSP Nifty Midcap 150 ETF, DSP Nifty Smallcap 250 Index Fund, and DSP Nifty Smallcap 250 ETF. These offerings enhance DSP’s passive investment options by offering rules-based, low-cost access to the mid- and small-cap segments, which together constitute India’s broadest and most vibrant corporate universe.

The New Fund Offers (NFOs) will be open from 24 November to 08 December 2025.

“Midcaps and smallcaps sit at the intersection of innovation and growth in India. Our research shows that disciplined, rule-based exposure, instead of stock picking, has historically rewarded investors who stay invested through cycles. These products offer investors a simplified way to participate in broad-based market expansion,” said Anil Ghelani, CFA – Head – Passive Investments and Products at DSP Mutual Fund.

The Nifty Midcap 150 Index includes India’s companies ranked 101st to 250th in the Nifty 500, while the Nifty Smallcap 250 Index covers those ranked 251st to 500 within the same index. Historical data indicates that both indices have achieved long-term returns significantly higher than the broader market. Over 10 years, the Nifty Midcap 150 TRI has averaged rolling returns of 16.2%, notably surpassing the 12.6% return of the Nifty 500 TRI, based on index performance analysis as of October 31, 2025.

The small-cap index has also rewarded investors over longer horizons, with the Nifty Smallcap 250 TRI delivering an average 10-year rolling return of 13.5%, compared to 12.6% for the Nifty 500 TRI. Both indices can experience higher drawdowns than broader market indices; however, as the holding period lengthens, both indices increase the likelihood of non-negative returns.

The two indices also provide exposure to sectors and industries where large-cap representation is limited. The Smallcap 250 has a strong presence in areas such as capital markets, industrial products, healthcare equipment, building materials, textiles, and other niche segments. It also includes several category leaders, highlighting the depth of emerging leadership beyond the top 250 companies. Meanwhile, the Midcap 150 offers more stable earnings profiles than the broader small-cap universe and contributes significant breadth during periods of widespread market activity.

Both indices have low overlap with active fund categories, providing significantly different exposures. The Midcap 150 shares only 32% overlap with active midcap funds, while the Smallcap 250 has an even lower overlap of 18% with active smallcap fund portfolios. This structural difference ensures that index-based investing can serve as a complementary and diversified component alongside active strategies, according to the press release.