Should you continue with your small cap mutual fund SIP?

SIP Mutual Funds: On the back of weak global signals, rising inflation and concerns over the global slowdown, the Indian stock market has seen strong selling over the past few months. Year-to-date (YTD), the Nifty 50 index and BSE Sensex are down more than 10%. However, the BSE Small-cap index fell by almost 16.75%, while the BSE Mid-cap index corrected by almost 13.40% during this period. So, SIP investors who have chosen small cap mutual funds might be wondering if they should continue their SIP or wait a while until the stock market stabilizes.

Unveiling the investment strategy with regards to SIP Small Cap Mutual Funds, Mayur Shah, PMS Fund Manager at Anand Rathi Advisors Ltd, said: “The SIP concept itself is all about reducing the volatility of your longer-term returns.Therefore, keep investing in the Small-cap Fund during tough times.I would also suggest that whenever you see that your portfolio is now making healthy returns and the markets are making new highs, opt for partial redemption of your profits and restart your SIP again.As mid and small caps have a tendency to opt for a correction after every significant rise.The call for partial redemption to be taken when investing SIP for the next year is less than 10% of the accumulated investment is these funds.

Advising long-term SIP investors of small cap mutual funds to continue their investment, Pankaj Mathpal, MD and CEO of Optima Money Managers, said: “SIP gives an average return over the period. term need not worry about whether the market is nosediving or rising, but the rule applies well when you are in the nascent phase of your investment. of your maturity period or say close to two years of the maturity period, then you should start fishing your money from risky asset allocation to safe options or, for example, debt instruments. strategy helps an investor to ensure the safety of his money from Russia and Ukraine as a crisis before the maturity period.

Mathpal said the SIP of long-term mutual funds should start with a higher allocation to small caps, followed by an allocation of mid-cap, large-cap and debt funds. However, over time, when the appetite for risk decreases over time, you have to start moving your fund from risky instruments to safe ones.

“At maturity, one should have maximum exposure to debt, followed by exposures to large, mid and small caps,” Mathpal said. He said you have to keep an investment objective in mind and once the objective is achieved, long-term investors are advised to move their exposure from equities to debt funds.

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

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Dolores W. Simon