Returns from L/M/S Cap

Now those who talk about asset allocation generally end the discussion at these various asset classes. However, equity investors would do well to go a step even further. They can further allocate their equity portion between large caps, mid caps and small caps. While large caps are the safest of the lot, mid and small caps while being risky can generate the best returns over a long run. So a proper blend of these different categories of stocks can help you generate good yet stable returns over a 5 to 10 year period.

Now as we move into 2010, investors in small cap stocks must be the happiest lot. This is on the back of about 125% returns of BSE-Smallcap during 2009. This is higher than the returns recorded by the BSE-Midcap (106%) and BSE-Sensex (80%).