July 15, 2018

Time to invest in midcap mutual funds

The midcap index has corrected by 18% this year and is close to multiple supports on weekly charts. With the broader nifty index expected to takeoff, a turnaround in midcaps stocks is likely so the current environment provides a good opportunity for long term investors.

I was earlier not a big fan of mutual funds but recent SEBI ruling on schemes classification has changed my view. Funds can now invest only in a predefined list of stocks (large caps - 100 stocks, mid caps - 150 stocks etc). The small cap list is too long for my comfort.

Another factor is lack of ETFs in this segment. ETFs have always been my first choice.

Suggestions:

  • Save brokerage and invest directly with the AMC
  • Select  growth scheme. Avoid dividend plans as you will lose heavily on the benefits of compounding.
  • Lumpsum or SIP can be considered depending on your cash flow.

I/ my family are investing in ICICI and HDFC mutual funds over this coming week.

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