1. On 6th Oct'17, in order to ensure uniformity in respect of the investment universe for equity schemes, Sebi has redefined the equity universe, in terms of market capitalization, where large-cap stocks are now 1st 100 companies, mid-cap stocks are next 150 companies, and small-cap stocks are all remaining companies.
2. Simultaneously, Sebi also distinctly recategorized the underlying assets in various funds during this reclassification exercise, for instance:-
a) Largecap fund has 80% min. in large-cap stocks.
b) Midcap fund has 65% min. in mid-cap stocks.
c) Smallcap fund has 65% min. in small-cap stocks.
d) Multicap fund has 65% min. in all equity stocks.
e) Hybrid Aggressive fund has 65-80% in all equity stocks, and so on.
3. By 28th May'18, nearly all AMCs adapted them in the portfolios of their funds, and considering these vital disruptive changes, comparison of their past performances is irrelevant, as returns per se will differ now, and a fair comparison should, at best, be from 1st Jun'18 onwards only.
4. A fund category selection should be done purely on the basis of one's own risk profile and appetite first, both for medium-term and long-term goals.
5. Therefore, while investors with aggressive risk-taking ability may still get attracted towards midcap and smallcap funds, opting for top-rated multicap funds and hybrid aggressive funds would be more suitable for moderate and lesser aggressive investors respectively.
6. These funds are lesser risky as they are able to cushion themselves better by realigning portfolios rapidly to benefit from changing market moods during investor's accumulation stage, or to bear any redemption pressure of investors, as they are likely to be more liquid than midcaps and smallcaps.
7. Long-term wealth creation happens when fund management process has flexibility, which these funds amply allow through in-built mandates, whereby freeing investors' time and mindspace to focus on own careers / chosen vocations for advancement, thus automatically increasing investment potential further during earning years, for a richer and comfortable retired life.
8. Even after retiring, one can retain them, and then annually withdraw 4-5% of their accumulated corpus for meeting retirement expenses perpetually.
2. Simultaneously, Sebi also distinctly recategorized the underlying assets in various funds during this reclassification exercise, for instance:-
a) Largecap fund has 80% min. in large-cap stocks.
b) Midcap fund has 65% min. in mid-cap stocks.
c) Smallcap fund has 65% min. in small-cap stocks.
d) Multicap fund has 65% min. in all equity stocks.
e) Hybrid Aggressive fund has 65-80% in all equity stocks, and so on.
3. By 28th May'18, nearly all AMCs adapted them in the portfolios of their funds, and considering these vital disruptive changes, comparison of their past performances is irrelevant, as returns per se will differ now, and a fair comparison should, at best, be from 1st Jun'18 onwards only.
4. A fund category selection should be done purely on the basis of one's own risk profile and appetite first, both for medium-term and long-term goals.
5. Therefore, while investors with aggressive risk-taking ability may still get attracted towards midcap and smallcap funds, opting for top-rated multicap funds and hybrid aggressive funds would be more suitable for moderate and lesser aggressive investors respectively.
6. These funds are lesser risky as they are able to cushion themselves better by realigning portfolios rapidly to benefit from changing market moods during investor's accumulation stage, or to bear any redemption pressure of investors, as they are likely to be more liquid than midcaps and smallcaps.
7. Long-term wealth creation happens when fund management process has flexibility, which these funds amply allow through in-built mandates, whereby freeing investors' time and mindspace to focus on own careers / chosen vocations for advancement, thus automatically increasing investment potential further during earning years, for a richer and comfortable retired life.
8. Even after retiring, one can retain them, and then annually withdraw 4-5% of their accumulated corpus for meeting retirement expenses perpetually.