Avoid these Mutual Fund Categories | ET Money

There are some categories of mutual funds that can be too risky for investors. You would agree that if you take higher risk, you must also get higher returns. But that’s not how these categories work.

In this video, we will discuss the 5 categories that we feel you must avoid.

00:00 INTRODUCTION
01:58 Sector and Thematic Funds
06:00 Small Cap Funds
08:21 Multi Cap Funds
10:19 Credit Risk Funds
12:31 Long Term Gilt Funds and Long Duration Funds

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[mohddaud]

Misleading information on small cap funds. If someone has 10+ years of investment horizon, small caps generally provide better returns. Obviously one has to invest as per their risk appetite, but saying small caps are bad is simply conveying incorrect information.

[yaniv]

Why Shankar Nath is not here? Bring him back please. He was phenomenal.

[vasudevan]

Great work. but ET money comments on the small-cap are not clear and confusing. It would be really great if we get a clear answer to " Is investing in a small cap fund (more than 10-15 years) better than a large/midcap fund/ index fund?".

[sandipankhan]

I totally disagree with the small cap fund one. There is a specific reason behind it. As you all know that small cap companies moves up faster than large cap ones, so mutual fund houses can just pour in money and jack up prices like hell. When AMC houses pour money on a certain small cap company, that stock price rises significantly. Likewise, if we see the average of smallcap 250, it will always be of lower performance.

[samb]

Some Disagree.
1. Sector fund can be good investment at times. Consider present condition IT index all drawdown stage. Any one invest in IT index at present & accumulate for next six month going to get 30-32% return in 2 years time. Identify sector rotation and invest timely.
2. Small cap like - SBI, Quanta MF provided better return than any large cap return until now. Again a portfolio relocation frequently will provide good return.

3. Multicap is shit fund agreed.

There is no point to married to any stock or MF for life long. We should be smart enough to handle our money wisely by doing reallocation of our on portfolio (allocation of fund on different category) timely and get optimum return. If people have no time to look after their investment better buy NIFTY index fund will provide decent return than most of the mutual funds.

[srinivasansm]

Clear explanation thanks!! But when it comes to an active small cap funds investment, we need to wait more than 5 to 7 years of longer horizon then we will good return in active small cap funds.

[kkkk]

I have 3 scenarios. Which one gives max returns?

1. SIP of 10k in 1 MF for 20 years
2. SIP of 10k in 2 MFs for 20 years (5k each)
3. SIP of 10k in 1st MF for first 10 years, then SIP of 10k in 2nd MF for next 10 years

In all scenarios, amount is withdrawn only only 20 years. And suppose, returns are same for both funds.

Note, same amount invested in all 3 cases.

[kskumar]

Entry & Exit matters for Sectoral/ Thematic...
If we are good to play cycle their returns will surprise...

[prakashgurba]

Quantitative Thematic funds are sector and mkt cap agnostics --hence as diversified as any div fund

[JugaadTech]

On small caps, the data looks wrong, and what is average return? Why not look at CAGR? Category average cagr is 21% for last 10 years

[helraiserlastdaysofhell]

There is something called profit booking when the market achieves its peak as you have to manage and withdraw the profits, so you can reinvestment along with the lowest amount SIP, when there is a huge Dip or when the market trend goes downwards. Also invest via SIP with the low amount of investment (like 1 or 2k per MF), when the market is average or high. So we have to monitor the MF's or stocks every day for atleast 30 minutes in the morning and in the evening. There are several investors who talk about long term and also advice retail investors as to not to time the market, but the reality is if you go through their portfolio, they usually time the market and make investments accordingly (Example - Warren Buffet). Also if you wanted to get high returns like 16 to 20% returns every year, you have to book profits whenever, the market goes high (like now in 5th July'23). Retail investors who pretends that they keep doing SIP for long term and do not care for current profits and wish to with draw after 10 or 20 years will only get low profits like around 10%, and they miss the chance to acquire double returns within 5 to 6 years.

[lbkmaddy]

Yes.. misleading information on small cap and multicap... smallcap on longer run gives better run comparing to other schemes and muticap with proportion to all caps gives better returns even in bear times...this video can mislead a newcomer to mutual funds and stay away from some good categories

[yeshwanthreddykota]

@ET Money May i know why GENIUS invests in small cap index fund

[dileepmishra]

Sir

I admire you for being truthful, databacked metoducql professional exhibiting intellectual modesty


Thank you

[VickyGYT]

I agree to most of your videos but here the title of the video is little bit misleading. Are you saying don't ever invest in Small Cap? I think what you want to say is if you are investing in these category funds first study the investment pattern and then take the decision.

[akashterra]

Not a complete coverage of topic here, might be misleading for new investors.

Each MF is structured and managed in a very different way. And also how it plays as a part of overall portfolio is not explained.

This video probably helps new & conservative investors. For long term and a better growth strategy, most will need these Sectoral/ Thematic funds to be a part of their portfolio.

[balakumarp]

What are the type of index fund in which fund is better for my money growth

[mohan]

Great presentation, Very well explained at a steady pace. Thanks

[prabujayabal]

which type of fund goods? which fund is good fund? imm

[CMGM]

Please study more on how smallcap index work, the universe is huge - thus the MFs performance is not comparable to index. Most good smallcap companies move out to mid cap, thus keeping overall index CAGR low.