Mid-cap and small-cap indices are trading at a discount to their historical averages after last year’s sharp correction, allowing investors to gradually increase investment in these two segments. Individual investors invest in these two categories through mutual funds. Mid Cap and Small Cap funds saw net inflows of Rs 117.6 billion and He Rs 137.8 billion respectively in November, while Large Cap funds saw net outflows of Rs 103.9 billion. .
Mid-cap and small-cap stocks have captured the attention of investors over the past five years. While large-cap stocks are generally less volatile than average small- and mid-cap stocks, providing stability to portfolios, the small- and mid-cap segment often offers investors much of the potential for high growth. provide the opportunity for
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Mid-cap stocks help investors diversify their portfolios, capture dividends, and increase value. Strong fundamentals in the Indian economy have pushed mid- and even small-cap stocks higher, making current valuations attractive. Currently, the Nifty Midcap 100 is trading at 23.4x and the Nifty Smallcap 100 at 16x.
long term view
Investors should focus on mid- and small-cap stocks with at least a 3-5 year horizon as they can be very volatile in the short term. Sushil Jain, CEO of wealth manager PersonalCFO.in, says mid-cap stocks should be held for at least five to seven years. “In the current scenario, investing in small caps should be done with caution. Maintain your existing small cap allocations based on your risk profiling and time horizon. Invest at least seven years to 10 years. have to do,” he says.
Mid and small cap allocations should be based on the time horizon and investor’s asset allocation strategy. His partner, Brijesh Damodaran, managing BellWether Advisors LLP, said:
Things to check before investing
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Companies in these two segments often have higher returns because they have the flexibility to act quickly in the event of upturns or downturns. Look for companies in the mid- and small-cap segment with strong balance sheets and quality earnings growth. Note the company’s total debt and higher free cash flow. In fact, these factors help businesses navigate business uncertainty.
When choosing mid-cap stocks, it’s important to look for companies that have high margins and maintain those margins over time. A company with a leading position in this field is a good bet. Focus on the quality of management and make sure you have the ability to get ahead of the company and profit. He reviews his portfolio at least once a year.
View Mid/Small Cap Funds
Ideally, invest in small- and mid-cap funds via mutual fund routes. You can see 2-3 funds in each category based on fund performance and stock selection. Mid-cap funds offer more growth potential than large-cap funds and offer a better balance of risk and return.
A long-term, systematic investment plan for mid- and small-cap funds is an excellent investment option. In fact, mid- and small-cap funds have performed strongly over the last three years, with annual returns ranging from 22% to 30%, significantly outperforming large-cap funds.
smart investment
* Hold mid-cap and small-cap stocks for at least 3 years
Up to 5 years as these can be very volatile in the short term
*Ideally invest in these stocks through mutual fund routes
*Mid and small cap funds have shown annualized returns of 22% to 30% over the last 3 years
