Mutual Funds: Want to become rich through SIP/MF investments? MUST KNOW these details
Mutual Fund, SIP Investments: Small and mid-cap funds typically outperform large-caps during a bull market, but decline more when the sentiment turns bearish.
Small-cap vs Mid-cap vs large-cap: Mutual fund investment is on the rise in India, especially among the investors who believe in making an ocean from an ice tip. However, there are various categories that have been made for various types of investment goals. Hence, a mutual fund investor must know the difference in those categories. According to the mutual fund investment experts, mutual funds can be categorised into a debt fund and equity funds. In the equity mutual funds, it can be further categories in small-cap, mid-cap, large-cap and ELSS mutual funds. For a mutual fund investor, it becomes important that for which investment goal these mutual fund categories should be chosen by an investor.
Speaking on the difference in small-cap, mid-cap and large-cap mutual funds from a return point of view Kartik Jhaveri, Manager — Wealth Management at Transcend Consultants said, "Small and mid-cap funds typically outperform large-caps during a bull market, but decline more when the sentiment turns bearish. The choice of the right fund should be in line with the risk appetite, return expectations and investment horizon of the investor." He said that Small-cap funds typically have the highest growth potential, since the underlying companies are young, and seek to expand aggressively. They are more vulnerable to a business or economic downturn, making them more volatile than large and mid-caps. Investors who are keen to invest in the small-cap space and may not have the time to research but possess the high risk-taking capacity can look to invest in small-cap funds.
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On how much a mutual fund investor can expect a return and how these categories have given returns Balwant Jain, a Mumbai-based tax and investment expert said, "The small-cap mutual fund category is topping the return chart with 14.72 per cent in five years. The category has offered 16.01 per cent in the 10-year horizon. Whereas the large-cap category has given returns of 10.12 and 12.05% during the same period respectively."
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