The Mutual Fund Show: Is It Time For Large Caps After SEBI's Word Of Caution?

As mid-cap and small-cap stocks continue to rally, prompting the market regulator to urge mutual fund houses to conduct “stress tests” on schemes based on them, it may be time to examine large caps.

Query 1: I had a SIP in SBI Equity Hybrid MF but stopped it after it collected a corpus Rs 1 lakh. Now I am looking for a mutual fund that will provide support for future medical expenses.

Name: Shrirang, Age: 65 years

Mrin Agarwal: He should look at investing in an ultra short duration debt fund or a short duration debt fund. You could also look at keeping a 25% in Fixed deposit. I would recommend: short duration debt funds from ICICI Pru, HDFC AMC.

Rushabh Desai: Stick with ultrashort duration or low duration or even liquid funds.

Query 2: My son is currently in the US and has an NRE account. He wants to start 5 SIPs and invest 10K in each for retirement corpus. So, what funds would you recommend us?

Name: Johnson JK, Age: 54 years

Mrin Agarwal: I would weigh towards going for mid- and small-cap funds. I would suggest Mirae Asset Midcap fund, Kotak Emerging Equity Fund and Nippon Small Cap Fund. In case they want to play it slightly safer, they can go for flexi-cap funds, as well.

Rushabh Desai: Make sure to check out the AMC website for specific requirements. My top picks would be Parag Parikh Flexi Cap Fund and DSP Flexi Cap Fund.

Query 3: I have been holding Axis Bluechip Fund (SIP-Rs 5,000) and UTI NIfty Next 50 Index Fund (Rs 10,000). I am planning to condolidate them into a single large and mid cap fund to simplify my portfolio.

But I'm divided between the Zerodha Nifty 250 Large & Midcap Index Fund (passively managed) and the HDFC Large and Midcap fund (actively managed). Can you recommend one of these options or suggest some other fund?

Name: Dilna, Age: 36 years

Mrin Agarwal: Don't get into a passive fund, just because you are reading it or someone is telling you. I would like to go with the actively managed fund.

Rushabh Desai: It's better to have one active fund and one passive fund, for portfolio diversification.