MF investors should diversify by asset and geography to reduce volatility

Hold on to fundamentally sound stocks while culling weaker ones

The correction in mid- and small-cap stocks, which began in January 2017, appears to be gathering momentum now. The Nifty Midcap 100 is down 10.6 per cent year-to-date (YTD) and 13.5 per cent compared to its 52-week peak. The corresponding numbers for the Nifty Smallcap Index are 14.1 per cent and 19.1 per cent respectively. New investors in particular, who entered the markets during the recent rally and have never experienced a correction, need to hold on to their equity investments. 

Valuation discomfort: Discomfort with over valuation in the mid- and small-cap space is primarily responsible for the ongoing correction. On