First of all I would like to thank you for an A2A
Well, I’d like to start off by saying that you should have an idea about what types of risks exist in Large, Medium and Small Cap Funds.
I would rather suggest for you to first assess your risk capacity and then invest in certain types of funds and stocks.
You can do a risk assessment here: Financial Planning
Now coming specifically to your question, I will assume that you have knowledge of Small Cap Funds.
The FPI/FII inflow and the movement of the Indian equity is directly proportional to each other i.e. when there is inflow from foreign investors, Indian equity indices go up and vice versa. Hence, if you look at the latest movements for the month of October 2018, July 2019 and even August 2019 there were huge outflows from Indian markets and hence the performance of Indian markets for these months was negative.
Another factor which dragged down mid and small caps is the hefty valuations at which they were trading.
The trend in PE ratio is a good indicator to understand the movement in valuation.
If you have a lump sum amount to invest then do STP from liquid funds. This will help you to enter this space by taking advantage of volatility. Or simply opt for SIP, the most disciplined way of making an investment.
However, above everything, remember that the key to getting a good performance from Mid & Small Cap Funds is to have an investment horizon of at least 8 years or more. There are no shortcuts when it comes to investment in this space. Remember, this is one of the riskiest but most rewarding investment opportunity in the Indian market.
You can save money by investing in Direct mutual funds as you don’t have to pay a commission to a broker while making a transaction.
I encourage you to head over to Financial Planning we’ve also got an Android app which you can utilise for your gains.
