Mutual Funds: Should Mutual Fund Investors Bet on Large Caps in a Volatile Market?

Many investment experts urge investors to take refuge in large caps or Bluechips in times of crisis. As the market enters a volatile phase and grapples with many uncertainties, is it time to take refuge in large cap programs?

Surprisingly, most mutual fund participants aren’t talking about large cap plans now. Some say that theoretically there is always a case for large cap plans. However, others suggest flexible capitalization systems or mid and small capitalization systems. Provided that the risk profile of the investors makes it possible to invest in it.

Fund managers say investors shouldn’t put too much emphasis on debate and urge them to stick to their financial goals and invest based on risk appetite.

“For investors who are considering whether to invest in large caps or mid and small caps, we believe the optimal approach would be to invest in a flexible capitalization class. The fund manager here has the flexibility to move across market caps and take advantage of valuation differentials between market cap segments,” said S Naren, ED & CIO, ICICI Prudential AMC.

“Investors likely to make money over the next year will be those who focus on asset allocation, invest in profitable companies and invest in all asset classes with cash after taking consider the risk and not ignore it,” Naren added.

Chandraprakash Padiyar, Senior Fund Manager, Tata Mutual Fund, expects the investment cycle to recover and hold for the foreseeable future, led by manufacturing, capital goods, financial services, real estate and exports. This means a general recovery and a recovery of the economy.

“Bluechips are certainly good long-term bets for investors. However, I believe in a general recovery of the economy. Some small caps in the market can also deliver strong performance going forward,” Padiyar said.

As you can see, there are still strong arguments for large caps in these uncertain times. The market is jittery as it has no firm clues on rate hikes, liquidity in the money market if the government borrows heavily.

“The market is at a time when equity valuations are around 1.2 to 1.5 standard deviations above the long-term average. Generally, but not necessarily, one can experience relatively more stability. high in the blue chip segment,” said Himadri Chatterjee, Senior Managing Partner and Head of Advisory, IIFL Wealth.

Trideep Bhattacharya, CIO – Equities, Edelweiss Mutual Fund, agrees that bluechips are a good option for risk-averse investors. However, aggressive investors can choose mid-cap and small-cap plans.

“Think long term (more than 10 years). Long term compounding of wealth is the best way to generate returns, to have an appropriate asset allocation among the different options based on the risk profile of each individual and save for the long term,” Padiyar said. .

Dolores W. Simon