Midcap/SmallAndMidcap funds vs Largecap/LargeAndMidcap funds

POSTED BY kramasundar ON July 20, 2012 1:13 am COMMENTS (5)

For 15+ years investment horizon are Midcap/SmallAndMidcap better than LargeAndMidcap/Largecap funds?

5 replies on this article “Midcap/SmallAndMidcap funds vs Largecap/LargeAndMidcap funds”

  1. Dr M.Chandrashekhar says:

    I do not know the nuances– for my son , for his long term, I had started SIPs in one 5 star rated Large & Mid Cap Fund & one Large Cap Fund.

  2. Kapil says:

    You cannot say that a fund is good or bad. In my opinion, it’s a portfolio that we talk about.

    In a portfolio, having 100% allocation to mid-small cap fund is NOT recommended. Mid-small cap should NOT be your core part of portfolio.

    Generally, it’s 50% Large + 30% Mid + 20% small. Although, you can move around these figures according to your risk taking ability and age.

    So, I would say read more about asset allocation and give a good thought about the percentage that you need to settle with. And, then invest.

    Kapil M.

    1. kramasundar says:

      Thanks for your comment Kapil.

      I know that midcap funds shouldn’t be the core.

      But if you have nearly 15-20 years of horizon, what if have you allocate 70% in midcap and offload them to LargeAndMidcap after 5-7 years. And after 10 years shuffle the portfolio to be 75%LargeCap and rest in the MidCap?

      I have less than 5% of my portfolio in small cap. I am not a fan of smallcaps.

      I have my debt portfolio as well. So the discussion above is just about the Equity portfolio.

      1. kramasundar says:

        The reason for this discussion is the return potential of Midcaps? Of course it comes with the risk. But with long horizon, midcaps outperform the largecaps? or am i wrong?

        1. Kapil says:

          Well, as far as you have the right tool (i.e. knowledge) you can play your cards.

          I would rather prefer having a small percentage in mid/small cap funds Probably coz of 2 reasons:
          1. I can afford to invest the amount which is required to achieve my goal at 12% CAGR.
          2. I don’t have much risk taking capacity.

          Thanks.
          Kapil M.

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