Choosing Mutual Funds – Large Caps/Mid Caps/Small Caps

POSTED BY sunil ON February 2, 2013 10:56 am COMMENTS (3)

Dear All,

i have been recently going through various mutual funds which can give me returns of 12-15% over a period of 10 years…. and i find from the past performance, that many of the Large Caps, Mid Caps and Small Cap funds have generated those returns.

Now how do i decide on the type of Fund i choose, its only the Risk Profile i fit into?.

Well i am not Risk Averse, so would this mean i can venture into Small Cap Funds, which might fetch out better results over longer durations – Given the Fund Manager chooses MultiBaggers (No one is sure of it though).

Or would you say when you are getting 12-15 % with out risk why take a risk????

The amount is not very big, after i have invested for more than 7000 pm, the remaining 1000-1500 i am trying to put into this Small and Micro Cap stock Mutual FUnds, is it a good idea???? If not Why? Won’t i be missing the multibagger stocks in the long run (always sticking to the Large Caps).?

3 replies on this article “Choosing Mutual Funds – Large Caps/Mid Caps/Small Caps”

  1. sunil says:

    Thanks FFC and Ashal for your views….
    Yeah its only a small amount just to test the depths of small and micro funds over long run.

    Thanks once again for your views….

  2. Dear Sunil, from your original query, a majority of your money is going into large cap funds, so for this remaining 1-1.5K money you may opt a risky play in small caps. Please go ahead.



  3. The idea is not to get best returns. The idea is to get returns which will beat inflation in the long run. Small-cap funds and mid-cap funds are quite risky. So for most people it is recommended to invest a larger portion in large-caps and rest in small and mid-caps.

    The idea is to balance return and risk. So what you have invest is pretty good, You could increase the exposure to small and mid-cap a little more depending on your risk appetite.

    if you have higher exposure in small and mid caps you need to monitor actively and book profits periodically. Even with minimal monitoring a 70% large cap in equity component and good debt component with annual rebalancing will easily beat inflation. So if the amount invested is sufficient for the goal then you are in good shape.

    Dont worry too much about larger returns from small- and large caps too much. it is enough to have some exposure to these. Overdoing will do more harm than good

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