I was recently asked in an interview, “What mutual fund would you recommend for investors with FOMO (fear of missing out)?” A discussion.
The short answer is that investors with FOMO can never be satisfied. They will always clutter their portfolio with the next shiny product they come across. Unless and until they tell themselves, “my portfolio is diversified enough”, “I cannot be having winners at all times in my portfolio”, :”there will always be some funds (or stocks or bonds) that do better than what I have and there is nothing I can do about it (except buying indiscriminately!)”, the FOMO will always get the better of them.
That said, let me rephrase your question – “Is there any single mutual fund that gives me a flavour of different market segments” This is for those investors who have a little FOMO but it can be satifisfied with a reasonable choice.
I can think of two funds:
(A): Flexicap funds. This will offer a good enough exposure to large cap, mid cap and small cap stocks. We recommend choosing flexicap funds that are large cap oriented at all times for better stability.
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(B): Multi-asset funds. These will hold at least 10% of equity, bonds and commodities (gold/silver) at all times. Some of these are equity-oriented and some not. See: How will multi-asset funds be taxed after the 2024 Budget?
You can consider an equity-oriented multi-asset fund. This is particularly useful for those who suffer from gold-FOMO. The fund manager will take of asset allocation and rebalancing. The only catch is that either a flexicap or the multi-asset fund should be the dominant fund (if not the only fund) in your portfolio to see any meaninful benefit from the diverrsification.
Please note that equity-oriented multi-asset funds also have a good mix of large, mid and small cap stocks. So they have enough of everything to be the first (and only) equity fund in a beginner’s portfolio.
The only downside is these are active funds. Hopefully there maybe some pasive funds in these categories. But this is not a big issue. See: The “active vs passive” debate is not of primary importance in portfolio management
please note: An (equity orriented) multi-asset fund should be used in place of an equity fund. This allocation should not exceed 50-70% for long-term goals. The rest should be safe, fixed income – EPF, PPF, Debt mutual funds