Should I Switch from SBI Mid Cap Fund to Motilal Oswal and Axis Small Cap Fund to Quant Small Cap Fund?

Ans: Switching funds is a significant decision, especially when you have a long-term horizon of 20 years. Let's evaluate the pros and cons of switching from SBI Mid Cap to Motilal Oswal Midcap and from Axis Small Cap to Quant Small Cap based on various factors.

Evaluating Your Current Funds (SBI Mid Cap & Axis Small Cap)
SBI Mid Cap Fund:

SBI Mid Cap is a well-established mid-cap fund with a proven track record.
It has consistently delivered strong returns, especially over the long term.
The fund has a conservative strategy compared to some aggressive mid-cap funds, which can help manage risk during volatile periods.
Axis Small Cap Fund:

Axis Small Cap has been a reliable performer in the small-cap space.
It focuses on quality small-cap stocks, which means it tends to perform well during market corrections.
The fund managers maintain a quality-focused approach, which can provide more stability in this volatile segment.
Evaluating the Proposed Funds (Motilal Oswal Mid Cap & Quant Small Cap)
Motilal Oswal Midcap Fund:

Motilal Oswal Midcap has a more concentrated portfolio compared to SBI Mid Cap.
It follows a "Buy Right, Sit Tight" strategy, which means the fund sticks with its high-conviction picks for a long time.
This concentrated approach can lead to higher returns but also carries higher risk, especially during market downturns.
If you're comfortable with higher risk in exchange for potential higher returns, this can be a good option.
Quant Small Cap Fund:

Quant Small Cap is known for its aggressive and dynamic management style.
The fund has a more flexible and opportunistic approach compared to Axis Small Cap.
While it has performed very well in recent years, this aggressive strategy can make it more volatile.
Quant tends to switch its portfolio allocation rapidly based on market conditions, which can result in higher returns but also higher risk.
Should You Switch?
Risk Tolerance:

If you are comfortable with higher risk, switching to Motilal Oswal Midcap and Quant Small Cap can potentially deliver higher returns over a 20-year horizon. Both funds are more aggressive in nature.
However, if you prefer a more balanced and stable approach, staying with SBI Mid Cap and Axis Small Cap might be better, as they focus more on quality and risk management.
Investment Horizon:

Since your investment horizon is long-term (20 years), switching to more aggressive funds like Motilal Oswal Midcap and Quant Small Cap can work in your favor due to the compounding effect over time.
Over such a long horizon, short-term volatility may not matter as much, but you need to be mentally prepared for market ups and downs.
Consistency vs. Aggressiveness:

SBI Mid Cap and Axis Small Cap offer more consistency and are slightly conservative in their strategies.
Motilal Oswal Midcap and Quant Small Cap are more aggressive and can potentially generate higher returns but with more volatility.
Final Insights
If you have a high-risk appetite and can tolerate market volatility, switching to Motilal Oswal Midcap and Quant Small Cap could be a good move for maximizing returns over 20 years.

If you prefer more stability and a balanced approach, staying with SBI Mid Cap and Axis Small Cap would be a better option.

Whichever decision you make, ensure you stick to it for the long term and review your portfolio every few years to align with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment