Need advice on Averaging Small cap Fund

Q & A Forum › Category: Investments › Need advice on Averaging Small cap Fund

Thothathiri asked 7 years ago

Hi Shreekanth, Had started an STP for 1L each in below two funds, rs 2000 per week and the STP is completed.

L&T Emerging Businesses Fund Growth (small cap)
L&T Hybrid Equity Fund - Growth (Aggressive Hybrid)

Currently fund 1 appreciated negatively by 13% and fund 2 appreciated negatively by 3.8%, particularly small cap was hit bad due to recent market correction. Is it advisable to average the small cap fund now? Thanks for your suggestion.

6 Answers

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Sreekanth Staff answered 7 years ago

Hi, Is it STP or SIP? (STP = Systematic Transfer Plan & SIP = Sys Investment Plan) May I know your investment horizon (time-frame)? May I know if you have investments in other MF Schemes?

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Thothathiri answered 7 years ago

It is Systemic Transfer Plan from debt fund, totally 2 Lakhs, each fund 1 Lakhs. Now its completed. Investment horizon is 3 to 5 years Yes I have other MF investment.

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Sreekanth Staff answered 7 years ago

Hi, If your investment horizon is around 3 years then kindly switch from Small cap fund to any Short Term or Ultra Short Term debt fund (safer investment avenues). Related article : Top Mutual Fund Schemes to invest in 2019 | Best Equity Funds for Long-Term

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Thothathiri answered 7 years ago

Thanks Sreekanth for your time

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Thothathiri answered 7 years ago

As there is a negative appreciation, can I hold it for around 5 years. As there is no need to utilize the amount now.

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Sreekanth Staff answered 7 years ago

Hi, If you can hold on to the Small cap fund investments for more than 5 years (very long term) then you may try investing additional amounts in the next coming months. The Equity markets can be very volatile in the next 6 months, till the General Elections are completed or may be after that as well..