I am planning to do a lump sum investment in mutual funds and researching on which mutual funds to select. I have already been doing SIP in MFs from 2018, however, this is the first time I am investing lump sum in MFs and want to make sure I am not missing anything before making the investment and hence, looking for suggestions from this great community.
Goal:
- Build long term wealth for major life milestones like children study, marriages, my retirement.
- Looking to invest for 10-15 years and get around ~20% XIRR (20% sounds a lot for 10 years but would like to aim for this).
My Investment Theories:
Theory#1: Invest in actively managed mid and small cap funds for long term, when close to my goal/exiting funds, switch to large cap funds/hybrid funds.
Theory#2: Create a balanced portfolio with index funds (Nifty 50), flexi cap, mid cap and small cap funds in this order if investment amount i.e. index funds gets largest allocation followed by flexi cap, mid cap and small cap.
What do this group think which theory should we take in general for long term investment? Since it is long term (10 years), it feels like I should go with Theory#1 since small cap and mid cap funds should outperform in the longer term but is it that simple? Am I missing something?
Mutual Funds that I have selected so far:
- Large Cap or Flexi Cap
- Quant Flexi Cap
- PPFAS
- Mid Cap
- Motilal Oswal Midcap Fund
- Small Cap
- Quant
- Tata small cap
- One Gold ETF (yet to research about it)
MF Filtering Criteria:
- Low expense ratio
- Less overlap between my MFs.
- Past returns.
Please do share your opinion about both of these theories, would love to hear which one should I go far. Thanks!
5 posts - 3 participants