Can a moderate risk-taker invest in small cap mutual funds?

I am 28 year old, and I work in a PSU. I have a moderate risk appetite. I am investing Rs 15,000 per month via SIP in the following funds for my long-term goals. Kindly review my mutual fund portfolio.
Mirae Asset Large Cap Fund: Rs 2,000
Mirae Asset Emerging Bluechip Fund: Rs 2,000
Kotak Standard Multicap Fund: Rs 2,000
Parag Parikh Long Term Equity Fund: Rs 2,000
Franklin India Feeder Franklin US Opportunities Fund: Rs 2,000
Reliance Large Cap Fund: Rs 2,000
SBI Small Cap Fund: Rs 1,000
Reliance Small Cap Fund: Rs 1,000
ICICI Prudential Balanced Advantage Fund: Rs 1,000
My investment horizon is 10 years or even more.
--Kinshuk Singh

First, small cap mutual funds are not meant for moderate risk-takers. These schemes are highly risky and volatile, and they are suitable for investors with a very high risk appetite. Even a large & mid cap mutual fund scheme like Mirae Asset Emerging Bluechip Fund has high risk, since it is mandated to invest a minimum 35 per cent of its corpus in mid cap stocks.

Two, your investments in balanced advantage scheme and international scheme may reduce the overall returns from your portfolio.


Ideally, an investor with a moderate risk profile should invest mostly in multi cap mutual fund schemes. Such an investor can also take some exposure in large cap mutual fund schemes to diversify and reduce the overall risk in the portfolio. It is extremely important to have a focussed portfolio to maximise returns. Unnecessary diversification may dilute the overall returns from the mutual fund portfolio.