July 20, 2012 1:13 am
For 15+ years investment horizon are Midcap/SmallAndMidcap better than LargeAndMidcap/Largecap funds?
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.
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.
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.
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?
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.
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