Should I stop my SIP in Franklin India Smaller Companies Fund?

I have been investing Rs 2,000 on Franklin India Smaller Companies Fund (growth) since 17/3/17. The fund is giving me negative return of around 7%. What should I do? Stay invested or switch? Or stop the SIP? I have a long-term horizon of around 6 to 8 years. I have so far invested Rs 68,000 and the current value of investment is around Rs 63,884.
-Vijay Kumar Rastogi

You are investing in a small cap mutual funds. These schemes have been suffering in the last couple of years. That is the reason why you are seeing negative returns on your investments. Small cap funds are volatile and they go through ups and downs - that is why these schemes are recommended only to aggressive equity mutual fund investors with a very high risk appetite and ability to tolerate volatility.

Franklin India Smaller Companies Fund is considered a relatively low volatile conservative small cap funds that is true to its label even before the recategorisation. You can ignore the recent underperforamance of the scheme and continue with your investments.


However, you should use this opportunity to assess whether you have the necessary risk appetite to invest in small cap schemes. Take an online quiz to find out your risk profile. If your risk profile is indeed aggressive, you may continue with the scheme. Otherwise, you should choose a scheme that matches your risk profile.