Exit small, midcap funds if risk appetite low and time horizon short

Those having considerable amounts of both should rebalance and stay put

Over the past year, while the Nifty50 is up 27.4 per cent, the Nifty Midcap 150 has risen 56 per cent and the Nifty Smallcap 250 is up 65.9 per cent. 

Both mid and smallcap funds have witnessed heavy inflows over this period. After such a humongous run-up, investors need to turn extremely cautious in these segments.      

Risks higher in smallcap funds
 

The risks, say experts, are greater in smallcap funds than in midcap funds. “Smallcap schemes have larger exposure to stocks outside the top 500 stocks in terms of free-float market cap. These more volatile stocks have