Mutual Fund Allocation: How Much Should Investors Allocate To Large, Mid & Small Cap Funds?

How should investors build a mutual fund portfolio for long-term wealth creation? The right asset allocation depends on return goals, risk appetite and investment horizon. Shweta Rajani, Mutual Fund Head, Anand Rathi Wealth, suggests an equity-heavy portfolio of around 70–80% for investors targeting 14–15% returns over more than five years. Within equities, she recommends allocating 55–60% to large caps, with the remaining portion split equally between mid and small caps. Investors can use large-cap, flexi-cap and large-and-mid-cap funds, while combining mid-cap, small-cap and multi-cap funds to build a diversified mutual fund portfolio suited to their goals and risk profile.