Opt for large-cap funds to overcome uncertainty

Last Updated: Fri, Dec 07, 2012 21:00 hrs

pWhile key equity indices started moving up from mid-June this year the rally in markets became more prominent in September raising hopes of further gains Even as stocks of larger companies gained smaller stocks also rebounded sharply as they were also beaten down to low levelsppHowever with global uncertainty once again raising its head markets have lost about 3 per cent from their October peaks raising questions about the sustainability of the rally Given the looming events of the US fiscal cliff continuing crisis in Euro zone and weak economic environment in India the road ahead is still not clearppEven as the retail participation continues to be dismal the going for investors hasn&rsquot been easyppSo amid such a scenario what should retail investors do when considering investments in the equity markets via mutual fund route Should they be looking at the mid-cap funds &ndash which can earn them better returns amid a rally or play sector specific stories through sectoral funds or for that matter stick with large-cap diversified fundsppExperts advise investors to go safe in their picks as far as category of funds is concerned They maintain that equity investments need to be a continuous process through systematic investments and not putting a lump sum at one go And when it comes to funds they are unanimous on advising investments in large-cap fund categorypp&ldquoUncertainty is still persisting Investors should stay away from high-beta stocks I would prefer that investors opt for large-cap funds over mid-cap ones as size quality safety and performance do matter in uncertain times Let some certainty come in then only buying mid-cap story will make sense as one should remember mid-cap counters fall easily in trouble times&rdquo says Akshay Gupta chief executive officer CEO of Peerless Mutual FundppAgrees Anand Shah chief investment officer CIO at BNP Paribas Mutual Fund According to him whatever rally had to happen has happened signalling his clear priority to go for large-cap fundsppSanjay Sachdev CEO of Tata Mutual Fund says &ldquoInvestors should not be opportunistic and not aim to make quick bucks They need to be disciplined in their investments for longer period and not driven by momentum driven rally If one thinks that considering the market rally it&rsquos good to get into mid-cap and book profits as and when it happens it&rsquos better to invest directly into the markets&rdquoppFor now industry experts are cautious about the year-to-date YTD steep returns &ndash the S&P CNX Nifty is up about 22 per cent And they want investors not to get carried away with the momentum and play safeppDhirendra Kumar CEO of Value Research says &ldquoThough mid-caps tend to do better during rallies one should understand that despite 20 per cent gains this year fundamentally nothing has changed Mid-cap funds are good and hold promise but investors need to be careful and keep a watch on their portfolios&rdquo He however did not share the high optimism of market participants on the expected rally in stock marketsp

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