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Should I sell Nippon India Small Cap Fund?

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Last Updated: May 28, 2020, 02.58 PM IST
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Summary If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

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I have been investing in Nippon India Small Cap Fund for the last two years. The scheme is not performing and showing great loss. What is the future of this fund? Should I continue with it or sell it?
-Meenu Jain

It seems, you have started investing in Nippon India Small Cap in 2018, after looking at its impressive performance in 2017. The small cap segment has been going through a bad phase in the last two years. Your entry just coincided with it. For example, Nippon India Small Cap Fund has given a return of around 67% in 2017. It lost around 16% in 2018, and 3% in 2019. The benchmark index for the scheme fell even sharper - it lost around 23% in 2018, and 8% in 2019. That means, though the scheme has been doing badly, it managed to perform better than its benchmark index.

As you know, small cap schemes are extremely risky and volatile, but they have the potential to offer superior returns over a long period. This is the reason why they are recommended only to investors with a large risk appetite and ability to tolerate lots of volatility. They also should have a longer investment horizon of seven to 10 years. If you meet these parameters, you may continue with your investments in the scheme.

(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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