Should I continue my investment in mid-cap funds?

I have three funds - SBI Bluechip Fund, SBI Magnum Midcap Fund and SBI Magnum Multicap Fund. Of them, SBI Magnum Midcap Fund has not been performing well for the last two years. Should I continue or redeem my investments in the same?
- Uday

You should diversify by investing in multicap funds across different AMCs. At times, large-cap may do well and in some cases, small-cap funds may perform well. Now, if you change your investments based on this scenario, then you may not be able to derive much, as you will end up investing in a fund that has already performed well.

Therefore, diversify your money. All the three funds chosen by you are good funds. Having said that, mid- and small-cap funds are a little bounded by their respective investment universe. However, multi-cap funds, with their go-anywhere mandate, will help you diversify easily by investing across the available investment universe.

Investing in multi-cap funds is also a low-maintenance way of investing across the available universe of stocks. Otherwise, you will continue to switch from one best fund to another, which has already performed well. Important is to invest in the fund that will perform well in due course of time.

This article was originally published on January 14, 2020.