tackle volatility typically associated with equity mutual funds. Equity-oriented hybrid schemes or balanced schemes are also ideal for novices to the stock market. These schemes invest in a mix of equity (minimum 65 per cent) and debt, and they are relatively less volatile than pure equity schemes that invest the entire corpus in stocks. Equity-oriented hybrid schemes are the best investment vehicle for investors looking to create long-term wealth without much volatility. A regular investor looking to invest in the stock market need not look beyond mutlicap mutual funds or diversified equity schemes. These schemes invest across market capitalisation based on the view of the fund manager. They invest mostly in largecap and midcap stocks, with a small allocation to smallcap stocks. A regular investor can benefit from the uptrend in any of the sectors, categories of stocks by investing in these schemes.
Some investors want to play extremely safe even while investing in stocks. Largecap schemes are meant for such individuals. These schemes invest in top 100 stocks and they are relatively safer than other stocks. They are also relatively less volatile than midcap and smallcap schemes. In short, you should invest in largecap schemes if you are looking for modest returns with relative stability.
What about aggressive investors looking to take extra returns by taking extra risk? Well, they can bet on midcap schemes that invest mostly in medium sized companies. These schemes can be a bit volatile, but they also have the potential to offer superior returns over a long period. You can invest in midcap schemes if you have a long-term investment horizon and an appetite for higher risk.