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How much exposure should you take to gold and mid- and small-cap funds?
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Large-cap funds are showing a category average return of 13.21 per cent over the past year. Many investors have asked us whether this is the right time to enter large-cap funds. Investors often tend to chase categories that are showing good past performance. This should be avoided. Instead, if you have a five-seven-year horizon, enter equity funds. Build a diversified portfolio spread across market caps, instead of chasing only one category. An investor with a moderate risk appetite may have 70 per cent allocation to large-cap funds, 20 per cent to mid-cap funds, and 10 per cent to small-cap funds. Then he should select consistent funds from each category and start systematic investment plans in them. Go for this kind of allocated approach. Books profits or buy more when allocations change due to market movements.
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