1. For initiating systematic long-term investment in a mid-cap or small-cap fund, select one with high star rating and mid- / long-term past returns, which indicate a proven track record and performance history.
2. Choose a fund through peer performance ranking across a common time period, preferably from within the top 25%.
3. As no single fund stays in the top quartile at all times, check how soon it rebounded after slipping, and whether it continued to stay in the top 50% for over a year.
4. Review annually and replace a laggard if its ranking slipped for four consecutive quarters among peer funds, as it cannot recover such a downfall in ratings soon enough.
5. It is important to keep in mind that as per Sebi's categorization, a mid-cap / small-cap fund will invest 65% min. (going upto 100%) in mid-cap and small-cap stocks respectively, while the rest can be in other stocks and debt products, depending on the investment style decided by its AMC.
6. As per Sebi's redefined equity universe, in terms of market capitalization decided by Amfi monthly, the 1st 100 companies are large-cap, the next 150 companies are mid-cap, and all other companies are small-cap.
7. Investing in a mid-cap / small-cap fund requires patience, with 5-yr+ time frame, for allowing cost-averaging during a full market cycle, and is considered an aggressive style of investment.
8. A lesser aggressive investor may opt for a multi-cap fund which will invest 65% min. (going upto 100%) in equity stocks of any market capitalization, with the rest in debt products.
9. This allows flexibility in realigning its portfolio, for cushioning itself rapidly to changing markets, or redemption pressure, as it can suitably pick from a variety of stocks, depending on its fund manager's deft ability within the mandate given by the AMC.
10. A conservative equity fund investor may opt for a Hybrid Aggressive fund which will invest 65-80% in equity stocks and 20-35% in debt products, with built-in periodic rebalancing mandate.
2. Choose a fund through peer performance ranking across a common time period, preferably from within the top 25%.
3. As no single fund stays in the top quartile at all times, check how soon it rebounded after slipping, and whether it continued to stay in the top 50% for over a year.
4. Review annually and replace a laggard if its ranking slipped for four consecutive quarters among peer funds, as it cannot recover such a downfall in ratings soon enough.
5. It is important to keep in mind that as per Sebi's categorization, a mid-cap / small-cap fund will invest 65% min. (going upto 100%) in mid-cap and small-cap stocks respectively, while the rest can be in other stocks and debt products, depending on the investment style decided by its AMC.
6. As per Sebi's redefined equity universe, in terms of market capitalization decided by Amfi monthly, the 1st 100 companies are large-cap, the next 150 companies are mid-cap, and all other companies are small-cap.
7. Investing in a mid-cap / small-cap fund requires patience, with 5-yr+ time frame, for allowing cost-averaging during a full market cycle, and is considered an aggressive style of investment.
8. A lesser aggressive investor may opt for a multi-cap fund which will invest 65% min. (going upto 100%) in equity stocks of any market capitalization, with the rest in debt products.
9. This allows flexibility in realigning its portfolio, for cushioning itself rapidly to changing markets, or redemption pressure, as it can suitably pick from a variety of stocks, depending on its fund manager's deft ability within the mandate given by the AMC.
10. A conservative equity fund investor may opt for a Hybrid Aggressive fund which will invest 65-80% in equity stocks and 20-35% in debt products, with built-in periodic rebalancing mandate.