When I have started investing I was mainly investing in Large Cap and it was around 70% of my equity portfolio. The Mid Cap was 20% and the small cap is 10%. Now the problem is in the last 1 year or so the small cap and midcap has given a great returns and people who would have remain invested capitalized in it.
It all depends on your risk appetite. I knew someone who had 50% of his portfolio in small cap and he is getting more than 25% CAGR from the last 2 years, this is because Small Cqp has given a great returns in last some years. I know the past performances doesn't matter and in he future the small cap might not give that much returns.
The thing is if your investment horizon is more than 15 years than having more small cap is a good thing because it can give a great returns. And similarly having a mid cap is also great to increase your returns. I am not suggesting that we should not invest in Large Cap. Large cap should be the maximum value in your portfolio but again having more mid cap and small cap is good for your investment portfolio.
Recently I have increased some of my mid cap portfolio and now my mid cap is the top most in my portolfio followers by large cap and then small cap. Since this is my retirement portfolio, I assume that I will retire after 16 years so having this allocation works for me. Now after every year I will be seeing the returns I will be generating in my portfolio and based on that I will doing allocation.
As of today my CAGR is around 17% which is quite to be honest. Getting more than 12% is a extra profit. I keep my expectations from Mutual fund to be 12% only and over that is just a bonus for me.
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