DSP Mutual Fund Launches 4 New Passive Schemes: Full Details Explained

DSP Mutual Fund has announced the launch of four new passive schemes, marking a significant expansion in their index-based offerings. These offerings strengthen DSP’s passive investing suite by providing rules-based, low-cost access to the mid- and small-cap segments, which together represent India’s broadest and most dynamic corporate universe.

In this blog, we will go deep into this topic. We will cover everything you need to know about these new funds, the historical performance of the underlying indices, the sector advantages, and why these might be the right building blocks for your portfolio.

The Big Announcement: 4 New Passive Funds

DSP Mutual Fund has officially announced the launch of four distinct passive funds designed to capture the growth potential of India's emerging companies. The new schemes are:

1. DSP Nifty Midcap 150 Index Fund
2. DSP Nifty Midcap 150 ETF
3. DSP Nifty Smallcap 250 Index Fund
4. DSP Nifty Smallcap 250 ETF

NFO Details:
For investors looking to enter during the New Fund Offer (NFO) period, the subscription window is currently open.

• NFO Opens: November 24, 2025
• NFO Closes: December 8, 2025

These funds are managed by Anil Ghelani and Diipesh Shah, aiming to replicate the performance of their respective indices with minimal tracking error.

Decoding the Indices: What Are You Actually Buying?

To understand the potential of these funds, we must look at the "engine" driving them, the underlying indices.

• The Nifty Midcap 150 Index: This index comprises India’s 101st to 250th largest companies derived from the Nifty 500. It represents the "middleweight" champions of the Indian economy, companies that have graduated from small-cap status and are often in a high-growth phase with relatively more stable earnings profiles than the broad small-cap universe.
• The Nifty Smallcap 250 Index: This index covers companies ranked 251st to 500th from the Nifty 500. This segment hosts several category leaders and underscores the depth of emerging leadership beyond the top 250 companies.

Historical Performance: The Numbers Game

Historical data demonstrates that both indices have delivered higher long-term returns compared to the broader market. According to an analysis of index behaviour as of October 31, 2025, here is how they stack up:

• Midcap Performance: Over 10 years, the Nifty Midcap 150 TRI generated average rolling returns of 16.2%. This is far above the 12.6% delivered by the broader Nifty 500 TRI.
• Smallcap Performance: The small-cap index has also rewarded investors over longer horizons. The Nifty Smallcap 250 TRI delivered 13.5% average 10-year rolling returns, compared to the 12.6% of the Nifty 500 TRI.

A Note on Volatility:
It is important to note that both indices can experience higher drawdowns compared to broader market indices. However, historical trends suggest that as the holding period is lengthened, both indices improve the probability of non-negative returns. These funds are best suited for patient investors willing to ride out short-term volatility for potential long-term gains.

Sector Exposure: Beyond the Giants

One of the most compelling reasons to look at these passive funds is the unique sector exposure they offer in areas where large-cap representation is often limited.

• Smallcap 250 Exposure: This index has a pronounced presence in niche segments such as capital markets, industrial products, healthcare equipment, building materials, and textiles. These are sectors that are often underrepresented in the Nifty 50 but are crucial to the Indian consumption and infrastructure story.
• Midcap 150 Exposure: This index contributes significant breadth during periods of broad-based market participation, offering a balance between the stability of larger companies and the agility of smaller ones.

The "Active" Overlap Analysis

A common question for investors is: "If I already hold active mutual funds, do I need these index funds?" The answer lies in the overlap analysis.

Both indices maintain a surprisingly low overlap with active fund categories, offering materially differentiated exposure:

• Midcap 150: Shares only 32% overlap with active midcap funds.
• Smallcap 250: Has an even lower overlap of 18% with active small-cap fund portfolios.

This structural differentiation ensures that index-based investing can serve as a complementary and diversified building block alongside your existing active strategies. By adding these passive funds, you are likely buying into companies that your active fund manager might have missed or chosen not to hold.

Investment Accessibility

DSP has made these funds accessible to a wide range of investors with low minimum investment thresholds:

• For Index Funds (Midcap 150 & Smallcap 250): Minimum investment is Rs 100 and any amount thereafter.
• For ETFs (Midcap 150 & Smallcap 250): Minimum investment is Rs 5,000 and in multiples of Re 1 thereafter.

Conclusion

With the launch of these four new schemes, DSP Mutual Fund has provided a robust toolkit for investors wanting to capture the full breadth of India’s corporate universe. Whether you are looking for the high-growth potential of the Nifty Midcap 150 or the niche sector leadership of the Nifty Smallcap 250, these rules-based, low-cost funds offer a disciplined way to participate in India's growth story.

Given the low overlap with active funds and the historical outperformance over the Nifty 500, these passive schemes present a compelling case for portfolio diversification, provided you have the patience to hold them for the long term.

Disclaimer: The content is meant for education and general information purposes only.  Past performance is not indicative of future returns. Mutual Funds are non-exchange traded products, and INDstocks is merely acting as a mutual fund distributor. All disputes with respect to distribution activity, would not have access to the exchange investor redressal forum or arbitration mechanism. Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing. INDstocks Private Limited (formerly known as INDmoney Private Limited) 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), AMFI Registration No: ARN-254564, SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.