Can I invest in small cap schemes with 3-5 year horizon?

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I invested in two ELSS tax saving schemes three years ago. However, their returns have been on the lower side. I have SIP of Rs 3,500 in both the schemes:
Axis Long Term Equity Fund (since three years - Rs 91,000 to Rs 95,000)
DSP Tax Saver Fund (since three years - Rs 94,500 to Rs 97,000)

Also, I started with ICICI Equity & Debt Fund last year with a SIP of Rs 5,000.

I think I need to rejig my folio of tax saving funds. Also, I wish to add a couple of other funds, too. Maybe a large cap like Axis Bluechip Fund or L&T India Value Fund or Mirae Asset India Equity Fund (now Mirae Asset Large Cap Fund). Also, I will start investing in a small cap fund like Reliance Small Cap Fund or HDFC Small Cap Fund. My investment horizons for them are at least three to five years along with a moderate to aggressive risk approach. If performing well, I can very well extend them to 10-15 years.

My queries are:
First, which new tax saving funds should I opt for? Currently, I am investing Rs 3,500 per fund. There is no problem with the lock-in period.
Second, what other open ended funds to opt for? I am ready to invest at least Rs 3,000-5,000 in two funds. Hybrid or multicap or midcap or thematic?? Should I go for one large cap and one small cap scheme? Kindly suggest some to balance the overall portfolio.

The lock-in period of the ELSS fund is now over. Can I invest the money I gathered there to other funds or similar avenues? Kindly suggest some options.
-- Manish Kumar

One, you are currently investing in two good ELSS mutual funds. Both these schemes are part of our recommendation list. For more, read: Best ELSS or tax saving mutual fund schemes to invest in 2019

You can continue to invest and hold on to your investments in these two schemes.

You should choose your mutual fund schemes based on your goals, investment horizon, and risk profile. Adding schemes from every category won't help you to diversify your mutual fund portfolio or maximise wealth, especially when you are investing a modest sum. Your portfolio should be focused to maximise returns. Also, it is extremely risky to invest in small cap schemes with an investment horizon of three to five years. You should invest in small cap schemes only if you have a longer investment horizon of seven to 10 years. Also, you should have a very high risk appetite and ability to stomach extreme volatility. These schemes can be highly risky and volatile.
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