I have 10 per cent investment exposure in Reliance Growth. This fund has not been performing for quite some time now and I am thinking of redeeming it. Should I invest the redeemed sum in a large-cap fund?
Reliance Growth is mid- and small-cap fund, a category which has been growing each passing year. With increase in the category, the relative performance of this fund has been going down, but the fund has not fared poorly and manages to outperform its category average. If you are not satisfied with this fund, you should exit and move into a large-cap fund, which as a category is less risky and has a better performance compared to the mid- and small-cap funds. You may consider investing in DSPBR Top 100 or Franklin India Bluechip. Both are large-cap funds with a proven track record and performance history to find a place in your portfolio. You can draw a lesson from this investment, investing in mid- and small-cap funds is risky compared to the broad large- and large- and mid-cap funds, which form part of core holdings. You should also limit your satellite holdings, in mid- and small-cap funds to less than 20 per cent of your holdings which will also include sector funds, gold funds besides thematic and international funds.