I have investments in DSP Small Cap Fund. I had invested though SIP in it and I ended the SIP in October 2017. Investment amount is Rs 1.11 lakh and the current value Rs 1,16,140. The annual return is 1.3%, very poor. This is three-year performance. What should I do? Should I keep the amount in it or take it out and put it in some other fund?
I am investing in L&T Emerging Business Fund, SBI Small Cap Fund and Franklin India Smaller Companies Fund in the small cap category. I am also investing in Mirae Asset Emerging Bluechip in the large & mid cap space and Edelweiss Midcap Fund in the mid cap space. Other than this, I have investments in tax saving funds.
Please guide me on DSP Small Cap Fund.
– Ankit Gupta
You are investing in very high risk categories. If your profile is aggressive and you are okay with the extra risk and volatility, you may continue with your investments in these schemes. Remember, mid cap and small cap categories are extremely risky and volatile, but they have the potential to offer superior returns over a long period. However, it is imperative to continue with your investments irrespective of the losses and volatility to maximize returns from these schemes.
You have not mentioned when you started your investments. So, it is not possible to offer a personalized advice. DSP Small Cap Fund like most small cap funds have been performing poorly since last two years. The small cap category has given over 50% returns in 2017. However, the category has lost in both 2018 and 2019 as most schemes have offered negative returns during these two years. The scheme has offered a little over 22% returns in the last one year, much higher than the benchmark and category. DSP Small Cap Fund is also a consistent performer in various time horizons. Three-year return is indeed 1.10%, but is definitely better than the benchmark (-3.81%).
You should always look at the performance of the scheme along with its relevant benchmark and category. Never look at the returns in isolation. It will not offer you a true picture.