Smallcap, midcap funds face risk of mean reversion: DSP MF MD & CEO

Data shows that markets may have mispriced the disinflationary trend that is gaining traction along with a stable demand and supply situation for government bonds, said Parekh

It is the right time for investors to rebalance their portfolios and raise their largecap allocation. This would have come down as a result of relative underperformance vis-à-vis mid and smallcaps, says Kalpen Parekh, managing director (MD) and chief executive officer (CEO), DSP Mutual Fund, in an email interview with Abhishek Kumar. Edited excerpts:

Some analysts have cautioned against the froth building in mid-cap and small-cap space. Are the concerns justified?

Currently, mid and smallcap stocks are mostly rising on account of strong inflows — both through direct buying as well as mutual funds. While many small and midcap companies