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    My mutual funds are giving negative returns; should I continue?

    Synopsis

    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 am 32 years old and I am investing Rs 50,000 per month in the following mutual funds:
    Kotak Standard Multicap Fund: Rs 15,000
    HDFC Mid-Cap Opportunities Fund: Rs 5,000
    HDFC Small Cap Fund: Rs 10,000
    HDFC Hybrid Equity Fund: Rs 10,000
    Motilal Oswal Long Term Equity Fund: Rs 5,000
    L&T Emerging Businesses Fund: Rs 5,000

    I have been investing for the past two years and all these schemes are giving negative returns. Should I continue to invest in these schemes? I am planning to invest for five to seven years. My risk appetite is moderate. Please suggest.
    --Prajwal Mishra

    Prableen Bajpai, Managing Partner, FinFix Research & Analytics, responds:

    Your mutual fund portfolio has a mid cap, multi cap, hybrid, ELSS, and two small cap mutual funds. Considering your risk appetite and your investment horizon of five to seven years, you should reconsider your investments in HDFC Small Cap Fund and L&T Emerging Businesses Fund. Both these schemes belong to the small cap space and they must be held for a longer period. You may consider exiting these two schemes, and instead increase your allocation to Kotak Standard Multicap Fund and HDFC Hybrid Equity Fund, respectively.

    You have also invested in a tax-saver from Motilal Oswal Mutual Fund. Each SIP instalment in this scheme will be locked for three years. If you do not need a tax-saver, you can switch to an open-ended equity fund from the same fund house. An investment of Rs 50,000 per month over the next seven years should help you to generate nearly Rs 61 lakh, assuming an annual return of 10%.
    Things You should consider
    • Annualized Return
      for 3 year: 2.7%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 5.2 Years
    Things You should consider
    • Annualized Return
      for 3 year: -1.52%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 3.11 Years
    (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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    1 Comment on this Story

    satya ranjan nayak321 days ago
    Boss, midcap, smallcap funds are helpful on long term investment. your time period is 7 years. Currently you have one multicap, one midcap, two smallcaps, one elss fund, one hybrid fund. In your sip portfolio, you should include large cap, aggressive hybrid & conservative hybrid fund in your portfolio. At present your schemes are showing negative return. If you shift your schemes to other or stop sips, you may get less value. So, stay in them, wait for next two years. Most probably mid & smallcap will go boost coming year from 3rd quarter 2020, last long up to 2 years. Just wait.
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