Must have funds in your portfolio

Index Fund

An index fund has portfolio constructed to mirror a market index, such as Sensex or Nifty. Index funds provide broad market exposure, low operating expenses and low portfolio turnover. This results in lower expense ratio, hence a lower cost of investing. Further, index usually mirrors returns on large cap stocks, hence the risk is typically that of large-cap investment

Multi-cap Fund

Multi-cap funds invest in stocks across market capitalization, hence the portfolio comprises of large cap, midcap and small cap stocks. Multi-cap funds are relatively less risky compared to a pure mid cap or a small cap fund therefore these funds are suitable for moderately aggressive investors. Multi-cap schemes provide greater flexibility to fund managers to invest across the spectrum of companies. This typically results in higher returns then a fund that is restricted in terms of market capitalisation.