Smallcap SIP investors lost money in all 29 schemes since Nifty peak

The smallcap SIP investors have lost money in all 29 schemes since the Nifty peak in September and delivered a negative XIRR of up to 46% on the investments an analysis of the performance of the category showed.

Around four funds offered negative XIRR of over 40% on SIP investments made on the first day of October last year. Mahindra Manulife Small Cap Fund lost the most of around 45.52% on SIP investments made in the said period. A monthly SIP of Rs 1,000 in the fund would have been Rs 4,473 now.


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Aditya Birla SL Small Cap Fund and Tata Small Cap Fund gave a negative XIRR of 42.31% and 41.82% respectively on the SIP investments. TRUSTMF Small Cap Fund delivered a negative XIRR of around 40.05% with the current value of investment at Rs 2,846.

Nippon India Small Cap Fund, the largest small cap fund based on the assets managed, delivered a negative XIRR of 38.88% since Nifty peak, followed by HSBC Small Cap Fund which lost 38.69% in the similar period.

Quant Small Cap Fund offered a negative XIRR of 36.09% on SIP investments made on October 1, 2024 post Nifty peak in September. SBI Small Cap Fund and Kotak Small Cap Fund delivered a negative XIRR of 35.56% and 35.54% respectively in the mentioned period.

DSP Small Cap Fund and Franklin India Smaller Companies Fund lost around 33.97% each on the SIP investments made post Nifty peak. In the similar time frame, Motilal Oswal Small Cap Fund gave a negative XIRR of 26.20% on SIP investments followed by Axis Small Cap Fund which offered negative XIRR of 25.58% in the same period.

The peak of Nifty50 was in September 2024 at 26,277.35 and since then the benchmark index has been down by 10%.

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According to a report by ET, the market veteran and chief investment officer of ICICI Prudential Mutual Fund, S Naren at a recent event mentioned the risks of investing in expensive stocks even in a staggered fashion, among other issues, in a rare instance of an experienced industry insider spelling out the trigger warning explicitly.

“If an investor puts money into the wrong product through the popular Systematic Investment Plan (SIP) at the wrong time, it means trouble,” said S Naren.

The report further highlighted that Naren referred to the continued flows into equity schemes that bet on small-cap and mid-cap stocks - considered expensive even after the recent sell-off. He further highlighted a few periods when SIPs as an investment plan would have lost money for investors. These included phases like 1994-2002 and 2006-2013 when SIPs in mid-caps would not have yielded any returns; on the contrary, the investment strategy eroded investor money.

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According to Naren, the outlook for SIPs in such schemes looks unfavourable unless done for 20 years, which is a rarity. Currently, he recommends SIPs in large-cap, flexi-cap schemes or equity-oriented hybrid products.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)