Should I sell my investments in L&T Emerging Business Fund?

I invested in L&T Emerging Business Fund (growth) in 2017. The fund has been performing terrible and I have stopped my SIP. My total invested amount is Rs 60,000 and the current value is Rs 54,000. Is it wise to redeem money now or wait it to get some profit? My money is just lying there.
-Vidhi Tripathi

L&T Emerging Business Fund offered a whopping 66.5% returns in 2017. It seems, you picked the best performer of the year to invest. Sadly, the scheme and the small cap category has been offering very poor or negative returns since 2017. In fact, most equity mutual fund categories have been suffering in the last two years.

The first thing for you to do is to ask yourself whether the prolonged poor performance of the scheme really makes you nervous. If yes, you have got into the wrong investment category. Equity mutual funds do not offer steady returns. The returns can vary widely depending on the performance of the stock market. Small cap schemes are even more risky and volatile. That is the reason why small cap schemes are recommended only to aggressive investors with a very high risk tolerance and ability to withstand volatility. One should also have a longer investment horizon of at least seven to 10 years to make money from small caps. If you are not comfortable with extra risk and volatility, you should reconsider your decision to invest in the scheme.


As for the performance of L&T Emerging Business Fund, the scheme has been in focus of mutual fund analysts ever since its celebrated fund manager Soumendra Nath Lahiri left the fund house in November 2019. Unconfirmed reports of L&T Mutual Fund looking to sell business also added to the uncertainty. As said earlier, the last two years have been tough for small cap funds, and even L&T Emerging Business Fund fared poorly during the period. However, the scheme fell less than its benchmark in both 2018 and 2019. If you can afford to wait, you may hold on to your investments and wait for the revival of the small cap space to sell your investments. If you have indeed invested with a longer investment horizon and are ready to take the extra risk, closely watch the performance of the scheme along with its benchmark and peers.