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Investing in mid cap funds

When the markets go up, mid-cap funds tend to do better than diversified equity funds

What should be the choice between mid-cap funds and general equity funds? Is there any benefit of investing in mid caps right now?
-Suri

There can be benefits of investing in mid-cap funds because when the markets go up, mid-cap funds tend to do better than diversified equity funds. But the inverse of this is also true. When the markets go down, mid caps suffer a lot more. This has been the experience in the past two years. The sensex has reached the 21,000 mark and a lot of diversified funds have staged recoveries, but the mid-cap funds can still be compared to the 15,000-16,000 mark of the sensex. The recovery in market is premature because the dynamics have not changed. Mid-caps will benefit only with a sustainable recovery in the markets. We suggest you to diversify your investments and allocate only a part of your money in mid-caps.



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