Classification of Mutual funds,What should be the criteria?

POSTED BY ganesha ON October 2, 2010 10:00 am COMMENTS (3)

I would like to know about the classification about midcap, large cap and diversified portfolios.Kindly explain in layman terms how the classification is done and what should the investor look in for while investing.
Is it not sufficient to just look at the performance of the fund  and invest in it, why should we bother about the classification if the said fund is doing well.
Where ever the fund house invests, it should earn profits and show good appreciation of the money irrespective of the stocks it hold individually,because we are not directly investing in stocks or shares of the particular segment, then how does it matter?
kindly explain,
Thanks

3 replies on this article “Classification of Mutual funds,What should be the criteria?”

  1. ganesha says:

    Thanks you so much!!

  2. Jagadees says:

    @ganesha
    I came across a nice article in outlook money regarding your question. have a look at it – http://money.outlookindia.com/article.aspx?267348

    Happy investing 🙂

  3. Ganesha

    Good questions first of all .. In shares we look if they are large cap or small cap company , the bigger a company is (large cap) , there are more chances of its survival or stability , rather than a small cap . the problem is not returns , its the volatility in returns .

    So just like shares we have large cap or small cap MF which invest in respective companies , so large cap funds will have lesser risk/return compared to midcap or small cap funds . So you have to choose if you like high return/risk or low return/risk

    Manish

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