Home / Money / Personal Finance /  Should you continue with your small-cap mutual fund SIP?
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Mutual funds SIP: Following weak global cues, rising inflation and global slowdown concerns, Indian stock market has witnessed heavy sell-off in last few months. In year-to-date (YTD) time, both Nifty 50 index and BSE Sensex has shed over 10 per cent. However, BSE Small-cap index has tumbled near 16.75 per cent whereas BSE Mid-cap index has corrected to the tune of near 13.40 per cent in this period. So, those SIP investors who have chosen small-cap mutual funds might be thinking whether they should continue their SIP or wait for some time till the equity market gets stabilised.

Unveiling investment strategy in regard to small-cap mutual fund SIP, Mayur Shah, PMS Fund Manager at Anand Rathi Advisors Ltd said, "SIP concept itself is about reducing the volatility of your returns over longer term. Hence one should continue making investment in Small-cap Fund during challenging time. Also would suggest whenever you see your portfolio is now making a healthy returns and markets making new high, go for partial redemption of your profits and again restart your SIP. As the mid-cap and small cap do have a tendency to go for correction after every meaningful upside. The partial redemption call to be taken when SIP investment for next 1 year is less than 10 per cent of accumulated Investment is these funds."

Advising long term small-cap mutual fund SIP investors to continue with one's investment, Pankaj Mathpal, MD & CEO at Optima Money Managers said, "SIP gives average return over the period of time. So, a long term investor need not to bother whether the market is nosediving of it is rising. But, the rule holds well when you are in the nascent phase of your investment. If you are nearing your maturity period or say near two years away from the maturity period, then you should start fishing out your money from the risky asset allocation to safe options or say debt instruments. This strategy helps an investor to ensure safety of one's money from Russia-Ukraine like crisis ahead of the maturity period."

Mathpal said that long term mutual funds SIP should start with higher allocation in small-cap, followed by mid-cap, large-cap and debt fund allocation. However, over the period of time, when one's risk appetite goes down with the passé of time, one should start switching one's fund from risk instruments to safe instruments.

"At the time of maturity, one should have maximum exposure in debt, followed by large-cap, mid-cap and small-cap exposures," said Mathpal. He said that one should keep an investment goal in mind and once the goal is achieved, it's advisable for long term investors to shift one's equity exposure towards debt funds.

Disclaimer: The views and recommendations made above are those of individual analysts or personal finance companies, and not of Mint.

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