Nervous investors in small and midcap schemes look for special advice

Investors in small and midcap mutual fund schemes are nervous. Perturbed by the possibility of a steep fall of small and midcap stocks, these investors are calling up their advisors to check whether they should take their profits. Sure, some advisors are asking them to take part of the profits, some others are using the opportunity to drill investment basics into the heads of these investors.

“We are making them understand that mutual funds are a long-term investment and the market will rise and fall during your investment horizon. This shouldn’t make you withdraw your investments,” says Puneet Oberoi, Founder, Excellent Investment Advisors. He adds that getting out of the equity funds at this point might also result in losing out on returns. “The investors might just miss a rally after a small correction if we get them out of the equity funds at this point,” Oberoi says.

According to Oberoi, investors who started investing in mid and smallcap schemes after 2014, are specifically worried about the market movements. “These investors have just seen the ups and not the downs of the market. They are the ones worried about lower returns. These investors have seen their schemes earn around 30 per cent returns in a year since they invested,” says Oberoi. He adds that many of these investors got into schemes without considering their risk profile.

However, some advisors are preparing to move these investors to `less-risky products.’ “We are dealing with these investors in a different manner. If the investors have an investment horizon of around seven to ten years, we are making them understand that market volatility is a part and parcel of your investments and that you will gain in the long run. But, for investors who have an investment horizon of less than five years, we are shifting a part of their money to debt funds via SWP,” says Vishal Dhawan, Founder, Plan Ahead Wealth Advisors. “Investors who got into the mid and smallcap funds just for the sake of returns won’t be able to bear a correction. We are shifting a part of their money to debt funds,” says Dhawan.