Getty ImagesMutual fund investors have started flocking to mid cap and small cap schemes once again. According to AMFI data released on Monday, the mid cap mutual fund category garnered Rs 1272.68 crore in May, up from Rs 491 crore in April. Similarly, the small cap mutual fund category saw inflows of Rs 1415.86 crore in May versus Rs 955.83 crore in April. Mutual fund managers say investors should should not forget some important points while betting on these two mutual fund categories.
“Investment is a serious business. We have been saying this time and again- don’t try to time the market. If you are coming in at this point thinking that about the returns, you need to think about the risk also. Because trying to get in when the market goes up and getting out when there is a correction doesn’t help your cause of wealth creation,” says Vinay Paharia, CIO- equities, Union AMC.
Mutual fund experts believe that to get the best returns in the long term, investors should invest in a staggered and disciplined manner. Investing through ups and downs of the market lets your investment grow and averages the purchasing cost. Moreover, mutual fund managers say that the volatility in the market is not over yet.
“We have come out of the correction and there is momentum in the market after election. However, there are uncertainties around growth and other data. We are still to look at the budget. I believe there can be volatility in the small and mid cap schemes in the near future. Investors should be prepared for that,” says Gopal Aggrawal, Senior Fund Manager and Head of Macro Strategy, DSP Investment Managers.
Fund managers also believe this might not be a start of a rally in mid and small cap segment. They say the stocks in the segment are not very attractive as of now. “Yes, the correction is over in mid and small cap segment but the valuations are not cheap. The correction has led to these stocks shedding extra valuations. We have to see good earnings growth in the small and mid-sized companies for the valuations to be fair,” says Vinay Paharia.
Fund managers believe that investors should get into small and mid cap schemes only if they have a risk appetite, long investment horizon and discipline to keep investing through different phases of the market. “Equity investing is not a speculative game. If you are investing when the returns are positive and pulling out when the market goes down, you are not earning much. You will also pay the exit load and taxes,” says Gopal Aggrawal.
Vinay Paharia says that investors shouldn’t invest on the basis of short-term returns. “Short-term returns shouldn’t be the base for long-term investments. Don’t expect your schemes to give similar returns in 6 months and ten years. If you do, you will end up getting disappointed,” says Vinay Paharia.
“Investment is a serious business. We have been saying this time and again- don’t try to time the market. If you are coming in at this point thinking that about the returns, you need to think about the risk also. Because trying to get in when the market goes up and getting out when there is a correction doesn’t help your cause of wealth creation,” says Vinay Paharia, CIO- equities, Union AMC.
Mutual fund experts believe that to get the best returns in the long term, investors should invest in a staggered and disciplined manner. Investing through ups and downs of the market lets your investment grow and averages the purchasing cost. Moreover, mutual fund managers say that the volatility in the market is not over yet.
“We have come out of the correction and there is momentum in the market after election. However, there are uncertainties around growth and other data. We are still to look at the budget. I believe there can be volatility in the small and mid cap schemes in the near future. Investors should be prepared for that,” says Gopal Aggrawal, Senior Fund Manager and Head of Macro Strategy, DSP Investment Managers.
Fund managers also believe this might not be a start of a rally in mid and small cap segment. They say the stocks in the segment are not very attractive as of now. “Yes, the correction is over in mid and small cap segment but the valuations are not cheap. The correction has led to these stocks shedding extra valuations. We have to see good earnings growth in the small and mid-sized companies for the valuations to be fair,” says Vinay Paharia.
Fund managers believe that investors should get into small and mid cap schemes only if they have a risk appetite, long investment horizon and discipline to keep investing through different phases of the market. “Equity investing is not a speculative game. If you are investing when the returns are positive and pulling out when the market goes down, you are not earning much. You will also pay the exit load and taxes,” says Gopal Aggrawal.
Vinay Paharia says that investors shouldn’t invest on the basis of short-term returns. “Short-term returns shouldn’t be the base for long-term investments. Don’t expect your schemes to give similar returns in 6 months and ten years. If you do, you will end up getting disappointed,” says Vinay Paharia.
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