Smallcap Mutual Funds: The stock market has continued to fluctuate since the new height has reached a new height in September last year. The maximum impact of market selling is being seen in the smartcap segment. In the last six months, the BSE smallcap index has broken by about 4 percent. At the same time, it has fallen by more than 10 percent in a year. The impact of the decline in the smallcap segment is also visible on the returns of the smallcap mutual fund schemes. In the last 6 months, more than 15 smartcap funds have caused a loss of about 10-18% to investors.
Market ups and downs raised the return of smalcap fund
On the basis of the last 6 months of returns amid the ongoing ups and downs in the stock market, the performance of smallcap mutual funds has been poor. There are a total of 19 schemes whose returns have fallen by 10–18%. The Mirai Asset Nifty Smallcap 250 Momentum Quality 100 ETF FOF has suffered the highest loss of 17.27%. At the same time, Edelweiss Nifty Smallcap 250 index funds have suffered the lowest loss of 10.25%.
Smallcap funds put at least 65% of their total assets (AUM) in shares and investments of smallcap companies. There is a possibility of sharp growth in these companies. They have high fluctuations and risks as these companies occur at the early stages of their development.
Return of these 19 smallcap funds decreased by 10-18% in the last 6 months
Source: Value Research, Based on 4 February NAV
What is the reason for the decline in smallcap mutual funds
MD and CEO Mohit Gang of Moneyfront explain that smallcap funds are always for investors who are looking for more profits with high risk. Their nature is more unstable than large cap stocks. The widespread fall in the market is mostly more on smallcap stocks as these shares are less liquid. In such a situation, a little selling pressure can also cause major damage. This is the reason that some smallcap funds have recently seen a major decline.
Who should invest in smallcap mutual funds
According to Varun Goyal, Senior Fund Manager (Equity) of Mirae Asset Investment Manager (India), the Smallcap Index (Nifty Smallcap 100 and Smallcap 250) has given an annual return of 17% in the last 20 years, which shows his ability to increase assets. Is. Smallcap funds are suitable for investors who plan to invest for a long time (5–10 years). However, those investing in smallcap funds should be prepared to bear high risk.
Mayank Mishra, Vice President (Product Management) of Mutual Fund in INDMoney, says that smallcap mutual funds are suitable for investors who expect high returns over long periods and have the ability to bear risks. These funds help to diversify the portfolio as well as take advantage of the growth of rapidly growing small companies. However, these funds have more fluctuations, so it is necessary for investors to handle patience and market fluctuations.