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It is the time to invest in small and mid cap mutual funds via SIP: Yogesh Bhatt of ICICI Pru MF

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The small and mid cap segments have been beaten down in the last one and a half years. Both the segments are still witnessing volatility even after a major correction. While most mutual fund investors want to stay away from these two segments, Yogesh Bhatt, senior fund manager, ICICI Prudential Mutual Fund, thinks otherwise.

He believes that this is a good time to start SIPs in small and mid cap schemes. “Investors need to understand the importance of catching the falling knife for value,” Bhatt told participants at the ET Wealth Investment Workshop (ETWIW) held in Hyderabad on October 4.

Bhatt also said that investors need to befriend volatility if they want to succeed in creating wealth over a long period. “It is the nature of the market to be volatile. It depends on how investors take the volatility,” Bhatt said. He also added that despite the volatility and correction, the market has given around 15 per cent CAGR since 2001. “Market favours the long-term investor,” Bhatt told participants.

However, he cautioned investors that if they are investing in a bad scheme or their portfolio manager is not doing a good job, the market cannot help them. “If the market is up by 500 points, it doesn't mean your portfolio is also up. If your portfolio has an underperformer, you will not earn good returns. It is very important to look for a scheme which has a good track record,” Bhatt said.

Speaking about the current market volatility, Bhatt said that the bouts of volatility in the market will stay here for some more time. He also said that investors need to normalise volatility and continue with their investments. “Investors need to understand volatility and how it is beneficial for them because volatility is here to stay. If you are investing via SIP, you will keep buying expensive if there is no volatility. So, focus on your long-term goal and don’t fear volatility,” Bhatt said.

Bhatt also told the participants that after every correction, we have seen the market going up because the valuations turn attractive. He also educated the participants with the help of a chart of the Sensex movement from January 2000 about the benefits of investing for the long term. See the chart below to convince yourself that after so many falls and corrections, the Sensex has only gone up in all these years.

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