Over the last one year, many investors have been using systematic investment plans (SIP) to invest in equity mutual funds. Due to a sharp run-up in the markets, SIPs in small and mid-cap funds have been one of the best performers giving returns as high as 50%.
But financial advisors caution against investing aggressively in these fund categories on the basis of recent returns as valuations are stretched. The NSE Small Cap 250 index now trades at a price to earnings (PE) ratio of of 102.84 as against 83.34, a year ago.
