My small cap mutual funds are down. Should I worry?

I am 29 years old. I have a moderate risk appetite and an investment horizon of 10 years. I want to create Rs 1 crore. I have been investing in the following mutual funds through SIP for last two years:

1. L & T Emerging Businesses Fund G: Rs 1,000 monthly
2. HDFC Small Cap Fund G: Rs 1,000 monthly
3. Franklin India Prima Plus Fund G: Rs 1,000 monthly
4. Mirae Large Cap Fund G: 1,000 monthly
5. Invesco India Contra Fund G: Rs 1,000 monthly

I have also invested lumpsum amounts of Rs 1 lakh in Tata Ethical Fund (G) for the long term, Rs 1 lakh in ABSL Low Duration Fund (G) and Rs 50,000 in IDFC Low Duration Fund (G) as emergency fund. As there is an ongoing correction in the small cap market, my small cap fund is showing negative returns. Should I worry about this? Is there any need for change? Can i invest in any multi cap or thematic funds to achieve my target? Kindly suggest me a good multi cap fund. waiting for your prompt reply.
-Numan Khan

First, you are investing Rs 5,000 per month via SIP and you have five mutual funds in your portfolio. This is not the right way to diversify your investments.

If you have a moderate risk profile, you should invest mostly in multi cap schemes. You may also add large cap schemes to your portfolio, if you want to diversify and reduce overall risk in the portfolio. This is all the diversification you need. Since you are investing currently a modest amount, you just need a consistent diversified multi cap scheme. That’s all.


You are currently investing in two small cap funds, a multi cap fund, large cap fund, and a contra fund. The small cap funds do not match your risk profile. They are meant for investors with a very-high risk appetite and capacity to withstand a lot of volatility.

Assuming an annual return of 12%, you need to invest around Rs 43,040 per month to create a corpus of Rs 1 crore in 10 years.