Many small-cap mutual fund investors are facing big losses. Since the Nifty index reached its highest point in September 2024, all 29 small-cap mutual fund schemes have delivered negative returns. Some investors have seen losses of up to 46% on their investments through Systematic Investment Plans (SIPs).
For example, Mahindra Manulife Small Cap Fund had the largest loss, with a drop of about 45.52%. If someone invested Rs 1,000 each month in this fund, their total value would now be just Rs 4,473. Other funds, like Aditya Birla SL Small Cap Fund and Tata Small Cap Fund, lost around 42% and 41%, respectively.
Even Nippon India Small Cap Fund, which is the biggest in terms of money managed, saw a loss of 38.88%. HSBC Small Cap Fund was not far behind, losing about 38.69%.
The Nifty50 index peaked at 26,277.35 in September 2024, but it has since dropped about 10%. During this time, experts warn that it can be risky to invest in small-cap stocks, especially when the market is showing signs of being expensive.
S Naren, a respected investment expert, explained the dangers of choosing the wrong mutual funds at bad times. He suggests that unless investors hold on to their SIPs for a long time—like 20 years—they may struggle to see returns. Instead, he recommends investing in large-cap or mixed-cap funds that have a better chance of performing well.
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