Wise Investing

·          Risk in Large-Cap Funds Large-cap funds invest mainly in blue-chip companies. Such funds inherently have certain advantages: The companies they invest in are large and stable businesses with the capability to weather market volatility. There is a high demand for these stocks, which makes them highly liquid. Their growth potential may be low, but so is the risk. And these funds generally bring modest but consistent returns over the long term. ·          Risk in Mid-Cap Funds These mutual funds invest mainly in mid-cap stocks. This brings a slightly higher potential for growth, and thus the possibility of relatively higher mutual fund returns. However, the possibility of risk is higher as mid-cap companies are less able to cope with market volatility than are large-caps. The goal of the fund manager is to allocate funds to mid-cap companies that could be successful in the future. ·          Risk in Small-Cap Funds The investment focus of these mutual funds is on smal