Here’s a list of the mid cap schemes that fell the most in the recent market fall:
Source: Value ResearchSmall cap funds:
Source: Value Research
Mutual fund managers say that irrespective of the troubles the long term view of these two segments continues to be positive. “We continue to be constructive on mid-cap funds for investors with an investment horizon of 5-10 years. We have been and continue to be cautious on small-cap funds, particularly with a near-term view. Hence, we advise existing investors to ride the volatility in the near-term to reap the benefits over the medium term,” says Trideep Bhattacharya, Chief Investment Officer- Equities, Edelweiss Asset Management.
Experts also want investors to go back and take a look at their portfolios. If investors cannot stomach this kind of volatility, they should either add more balance to their portfolio or stay away from mid and small cap funds.
“During times of market volatility, investors should prefer funds which invest in stocks with reasonable trading liquidity. Illiquid stocks are likely to see higher volatility during times of volatile markets. Underlying stocks of small and mid cap funds generally tend to be less liquid. Further larger companies tend to fend off macro challenges much better than smaller ones due to scales and balance sheet strength and have potential to provide superior risk adjusted return. Investors should also have such schemes in their portfolio,” says Sorbh Gupta, Equity Fund Manager, Quantum AMC.
Another important advice that fund managers offer to equity investors is to stagger their investments and keep investing. They say that stopping SIP is not a good idea when the market goes down. “”We are approaching the market with a near-term outlook being volatile and medium-term outlook being constructive. In this context, we are advising investors to invest in tranches in near-term rather than lump-sum investments,” says Trideep Bhattacharya.