Which is better large-cap mid cap or small-cap?

Large-cap funds are generally less volatile unless in the news. They are stable and have good liquidity and good yields. Mid-cap funds have moderate volatility and moderate liquidity. Small-cap stocks are more volatile and  less liquid. Large-cap companies tend to be more mature  and therefore less volatile during tough market times as investors turn to quality and become more risk-averse. Small- and mid-cap stocks may be more agreeable to investors than large-cap stocks, but small-cap stocks also tend to have greater price volatility.

From an investor's perspective, the investment life of mid-cap funds should be much longer than that of large-cap funds due to the nature of the companies. Sebi recently ranked how AMCs rank large and mid cap.

Small-cap stocks are long-term stocks that require patience. This means that you should only invest if you have extra money. Money you won't need for at least the next 7-10 years. For investors nearing retirement, they may not be the right investment.

While choosing to invest in any fund, one should consider all the above factors. The investment model that builds a portfolio depends on the investor's financial goals. Typically, a  portfolio focused on long-term goals includes all three types of funds in varying amounts. For example, not all large-cap companies are automatically good to invest in. Some large-cap companies are at the bottom while others are top-down, which could be tomorrow's mid-cap or small-cap. As a result, companies tend to change their market capitalization and it can go both ways. Yesterday's average could be today's large cap. On the other hand, what was once big value today may be small cap value.

Investors need to make informed decisions to build a portfolio with risk and return in hand. Large-cap funds are suitable for investors with a low risk tolerance. These investors look for investment opportunities in the stock market and prefer large caps. Also, for investors with long-term investment goals who don't want too high a return.

Also, investors with a  moderate risk tolerance may prefer mid-cap funds. These investors are not affected by short-term volatility because they prefer long-term investments. Therefore, small cap  funds are suitable for investors with a higher risk tolerance  and are very aggressive. Usually, these investors are well aware of  stock market fluctuations. One thing to remember is that when the market goes down, the returns will be  very low. Sometimes they are prone to losses when the market falls.

Experts recommend diversifying your portfolio so that you don't lose all  at once. Therefore, one should invest with caution and include small, mid and large cap funds in one's fund basket. Plus, it provides security and helps build lasting wealth.