Smallcap Mutual Funds Down 20%, What Should Investors Do?

Small-cap mutual funds have dropped by 20% in the last six months, based on a performance analysis. Around 28 funds were affected during this time. Mahindra Manulife Small Cap Fund saw the highest loss of about 24.69% during this period. The HSBC Small Cap Fund and LIC MF Small Cap Fund also dropped by 23.48% and 23.45%, respectively.

Quant Small Cap Fund delivered a negative return of approx. 22.74% in the given time period. The Franklin India Smaller Companies Fund also dropped by around 22.72%. The Nippon India Small Cap Fund, which has the highest assets under management (AUM) among small-cap funds, gave a negative return of 22.34% in the last six months.

Motilal Oswal Small Cap Fund gave a negative return of about 13.70, and Axis Small Cap Fund delivered a return of 15.87%. The Quant Small Cap Fund and Axis Small Cap Fund delivered a negative return of 17.19% and 16.79%, respectively, this year. The Quantum Small Cap Fund faced the least loss, falling by about 13.84% during the same period.

So far this year, Small-cap funds have dropped by about 19.98%. The biggest loser is the LIC MF Small Cap Fund, which has fallen around 24.90% in the current year. Small-cap funds are compared to the BSE 250 Small Cap – TRI and Nifty Smallcap 250 – TRI indexes. This year, these indexes have dropped by 21.34% and 21.94%, respectively.

A mutual fund expert says that small-cap funds are not doing well because their earnings growth is slow, and their prices are too high. Many small-cap stocks are now trading at prices that may not be sustainable.

Investors should always invest on the basis of how much risk they can take, how long they want to invest and their financial goals.