Ask ET Mutual Funds: Should I spread my investments to microcap, hybrid, infra funds?

I am a 30-year-old individual with a high risk-appetite. I have my contingency plan in place (bank fixed deposits for liquidity). I recently started with SIPs for my long-term goals: Rs 5,000 each in SBI Bluechip (D-G) and Mirae Asset Emerging Bluechip (D-G) and RS 3,000 in DSP BR Tax Saver (D-G). I want to invest more (Rs 7,000). Is it a good idea to spread it across a micro cap fund, a balanced fund and an infrastructure fund? If yes, can you please suggest funds in these categories which will properly diversify my equity portfolio?

--Someswar Panda

You have chosen good schemes to invest. You may continue with them.

Should you diversify your investments to include microcap, balanced and infrastructure funds? Well, the answer is not an easy one. Diversification doesn’t mean that you should include every investment option available to you. Diversification is about spreading your risk and maximising returns. There are many ways to do it. It is entirely up to you to decide how you want to go about it.


Here are a few pointers that may help you: You already have investments in two largecap funds (Blue Chip and Tax Saver) and a midcap scheme. You can add a microcap fund to complete the portfolio. A balanced fund comes with less volatility, but it may also offer lower returns than pure equity schemes over a long period. Investing in a sectoral fund (infrastructure) is extra risky. Sectors go through cycles.

So, it is very important to time investments in them. Infrastructure is a broad sector, still it had a bad phase two years ago. Sure, if you manage your entry and exit at the right time, sectoral funds can offer you superior returns.

You may also take a look at our recommended SIP portfolios to diversify your investments.

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