Should I stop investing in ICICI Prudential Midcap Fund?
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- Anwesha Bhattacharya
You are about to commit a common mistake done by many mutual fund investors. Getting in and out mutual funds based on their prevailing performance. You are currently investing in a mid cap scheme. The mid cap category has been doing badly since last one and a half years. Though the category got some respite after the recent rally, it is yet to bounce back in a big way. And large cap schemes have started performing recently and especially after the recent rally. However, you cannot get into the large cap mutual funds only because of their better performance.
In fact, you are making the wrong comparison. Mid cap schemes are highly risky and volatile. But they also have the potential to offer higher returns. Large cap mutual funds, on the other hand, are relatively less risky and volatile. They would only offer modest returns over a long period.
You have not shared the reasons why you got into the mid cap schemes in the first place. Also, it is not wise to judge the performance of your equity mutual funds in a year. You should invest in equity mutual funds with a horizon of five to seven years. In fact, you should have a longer horizon of seven to 10 years if you are investing in mid cap schemes.
Give at least three years for your equity investments to show some results. After three years, you can monitor the performance of the scheme on a yearly basis.
Use this opportunity to revisit your risk profile. Do you have the necessary risk appetite and investment horizon to invest in mid cap schemes? If not, you should stop investing in mid cap schemes.
If you are not clear about mutual fund basics, you should seek the help of a mutual fund advisor.