It is the right time for investors to rebalance their portfolios and raise their largecap allocation. This would have come down as a result of relative underperformance vis-à-vis mid and smallcaps, says Kalpen Parekh, managing director (MD) and chief executive officer (CEO), DSP Mutual Fund, in an email interview with Abhishek Kumar. Edited excerpts:
Some analysts have cautioned against the froth building in mid-cap and small-cap space. Are the concerns justified?
Currently, mid and smallcap stocks are mostly rising on account of strong inflows — both through direct buying as well as mutual funds. While many small and midcap companies have grown their profits in recent years, their valuations are significantly higher at 25-40 times of their earnings. Hence, there