iStockI have been investing in HDFC Mid-Cap Opportunities Fund since 2018. I am not happy with the performance of the scheme. Should I sell my investments? Or should I continue with it?
-Deepak Gopinathan
HDFC Mid-Cap Opportunities Fund is an average performer in the mid cap category. The scheme has been struggling for a while now. It has failed to beat both its benchmark and category average in the one- and three-year periods, according to Value Research data. However, the scheme has an impressive past record, especially in downside protection in a bad market.
Now, coming to your investments, you have been investing only for two years. Most equity funds have given negative or low single-digit returns during this period. That means, equity an asset class has failed to perform during this period. The stock market has witnessed a very narrow rally, driven by a few index heavyweight stocks, and only some mutual fund scheme that invested in these stocks managed to perform well in this period. That is why the key indices may be up, but most investors haven't made any money on their equity mutual fund investments.
If you have invested in this scheme with a very long-term goal, you may give it some more time. Keep a close watch on it – see how it performs against its benchmark and peers in the next one year. If the performance gap widens, you may consider selling your investments and move the money to a better performing scheme in the same category.
The scheme is also part of our recommendation list. As per our methodology, it has been in the last quartile for more than six months. We are closely watching the scheme and update about its performance regularly. For more, see: Best mid cap funds to invest in 2020
If you are a new investor and struggling to deal with the volatility and negative returns offered by the scheme, you should find out whether you have the necessary risk appetite to invest in a mid cap scheme. We have been noticing that many new investors are finding it difficult to deal with their investments in mid and small cap schemes. If that is the case, you should reassess your risk and find out your risk profile. If your risk profile is not aggressive, you should stop investing in mid cap schemes.
-Deepak Gopinathan
HDFC Mid-Cap Opportunities Fund is an average performer in the mid cap category. The scheme has been struggling for a while now. It has failed to beat both its benchmark and category average in the one- and three-year periods, according to Value Research data. However, the scheme has an impressive past record, especially in downside protection in a bad market.
Now, coming to your investments, you have been investing only for two years. Most equity funds have given negative or low single-digit returns during this period. That means, equity an asset class has failed to perform during this period. The stock market has witnessed a very narrow rally, driven by a few index heavyweight stocks, and only some mutual fund scheme that invested in these stocks managed to perform well in this period. That is why the key indices may be up, but most investors haven't made any money on their equity mutual fund investments.
If you have invested in this scheme with a very long-term goal, you may give it some more time. Keep a close watch on it – see how it performs against its benchmark and peers in the next one year. If the performance gap widens, you may consider selling your investments and move the money to a better performing scheme in the same category.
The scheme is also part of our recommendation list. As per our methodology, it has been in the last quartile for more than six months. We are closely watching the scheme and update about its performance regularly. For more, see: Best mid cap funds to invest in 2020
If you are a new investor and struggling to deal with the volatility and negative returns offered by the scheme, you should find out whether you have the necessary risk appetite to invest in a mid cap scheme. We have been noticing that many new investors are finding it difficult to deal with their investments in mid and small cap schemes. If that is the case, you should reassess your risk and find out your risk profile. If your risk profile is not aggressive, you should stop investing in mid cap schemes.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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