@gberen523 I too went through a process of consolidation. After using data from the AMFI and Nifty Indices websites, i zeroed in on Parag Parikh Flexi and Tata/Edelweiss Midcap 150 momentum.
The latter is based on backtested data from NSE as the index itself is quite new, but it is a risk I am happy to take given what that data promises.
@winman The issue with a midcap index fund is liquidity, which can easily manifest as high tracking error. I haven't checked the details of this fund, but I imagine it's quite new so not enough data on the fund itself (as opposed to the index) to take a call right now imho.
@proudmom1126 Yes, that's one of the things to consider. But as far as I know, weightage depends on free float. The fund has low allocation in less liquid stocks like MRF and Linde India (about 2%), which at current cumulative AUMs of the two funds comes to about 2cr in each stock.
It is something to keep an eye on if the AUM burgeons (and it might given its performance in bull markets).
@gberen523 Imo the benefits of parag parikh are usually reduced significantly when we diversify.
I mean when people pick stocks, they'd usually have a portfolio of 12-25 stocks.
I think ppfas has around 20-25 stocks and around 5 US stocks.
So one very common preferred approach by investors is that their stock portfolio should have significant large cap exposure, mid and small cap exposure and also international exposure. The percentages of exposure must be significant or it wouldn't matter.
Ppfas ticks all those boxes. But when we buy other funds the ratios of our overall portfolio can get skewed. Imo if other mutual funds are important to someone then he doesn't need to keep ppfas. But that doesn't mean OP's ratios of exposure in different market caps are skewed. If OP's overall portfolio has significant exposure to all these markets then it's great. That's assuming op wants a portfolio with exposure to these markets.
Most of my portfolio are in index funds and direct stocks so I have no preference towards ppfas.
@followtheshepherd I had put in a (now) negligible amount many years ago.
I'd since decided to invest in direct stocks and index funds (Domestic and international). Since I decided to buy stocks and funds outside of ppfas I decided not to invest further with ppfas - for the same reasons I mentioned. The benefits are reduced.
@gberen523 Diversification is not investing into 3-4 mfs. Its just about putting funds in different asset classes for risk mitigation. But with lower risk wr have lower returns as volatility is low.
You can go ahead with a single fund portfolio and that offers diversification as well.
Chose a single multi asset fund and thats enough. If you think gold is nonsense go ahead with BAF which has arbitrage in place of gold.
If you want equity heavy with some foreign equity as well PPFCF is best as it has 30 stocks which are enough for an equity portfolio.
@gberen523 When you invest in mutual funds, there are different types of diversification available: sector, market cap, AMC etc. Which diversification are you talking about? Usually, a MF has 30+ stocks, covering different sectors.
