FundsIndia: Mid/Small Caps' Short-Term Risk Yields Strong Long-Term Gains

• Mid- and small-cap equities experience more frequent and deeper declines than large-cap stocks.
• Despite higher volatility, mid- and small-caps have delivered stronger long-term returns, with midcaps multiplying wealth 21x and smallcaps 14-15x over 20 years, compared to large-caps' 13x.
• Nifty Smallcap 100 traded over 10% below its peak on 64% of days, and Nifty Midcap 100 on 48% of days, significantly more than Sensex (33%).
• Sharp declines (over 30%) in mid- and small-cap indices typically recover within 2-3 years.

Why It Matters: Despite volatility, mid/small-caps deliver superior long-term returns for investors.