First-time equity investors should bet cautiously

Excessive allocation to equities, or to mid and small-cap segment within it can cost you dearly

Investors from smaller towns are investing in mutual funds in a big way. According to data from the Association of Mutual Funds in India (AMFI), assets under management (AUM) from B15 locations grew 41 per cent year-on-year to Rs 3.09 lakh crore by the end of 2016-17. Meanwhile, with a one-year return of 21.67 per cent, the Nifty 50 is trading at a price-to-earnings (PE) ratio of 24.73. The Nifty Midcap 50 (PE 43.77) and Nifty Small cap 50 (73.92) are at even higher levels. With markets so bullish and valuations in the expensive zone, first-time investors from B15 towns