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Simple Question to ask your investment manager to know if you can trust him - MUST DO EXERCISE

Do this simple exercise to know whether/ not your investment advisor is qualified enough to make your investment decisions.

Time to read the article: 2 mins

Time to do the exercise: 5 mins

Amount of money you can save by doing this exercise: Crores!

Ask your investment advisor this question: I want to invest in Mid and Small-cap Mutual funds (via SIP/ lumpsum). What is your opinion?

Why should you ask this Question?

Mid and small-cap funds have recently given outstanding returns. On average, a midcap and small-cap mutual fund, in the last 6 months, has given a return of 31% and 33% respectively! And it is only natural, to want to invest in the top-performing funds (and categories).

Before you judge your investment advisor on the basis of his answer to the above question, let's take a minute to know, should you actually invest in mid and small-cap now?

Mid and small caps have gone into a heated zone and are over-valued now. The below table shows, their 10-year average valuations and how the current valuations of mid and small-caps are much higher.

Large caps are also trading at a premium to their 10 year average, but it is still not in bubble zone.

Hence, we strongly recommend, refraining from mid and small cap heavy funds.

Don't trust us? Here are some links to further fortify what we're saying -

You must have figured it by now. If your investment advisor suggests -

a. Yes. You should initiate/ increase exposure in mid and small-caps OR Yes, since your risk profile is aggressive.

You must re-consider working with him, as your investment advisor.

b. If he says no due to valuation concerns.

You're in good hands. Sit back and relax :)

If we can help you invest, reach us on -

Whatsapp: +91-91110-06340


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