Should I exit DSP Small Cap Fund and DSP Midcap Fund?

mar2You are investing in a mid cap mutual fund scheme and small cap mutual fund scheme. Both mid cap and small cap categories are riskier, and they are prone to volatile phases. That is why mutual fund advisors recommend schemes in these mutual fund categories to investors with an aggressive risk profile or large appetite for risk and ability to withstand volatility.

DSP Small Cap Fund has given negative returns (-11.73%) or lost money in the last one year. However, it has done better than its benchmark – S&P Small Cap TRI – which offered -12.53% in the same period. Even the small cap category has lost around 9.07% in the last year. DSP Midcap Fund has fared a little better during the last year. The scheme offered (or lost) -1.12%, while its benchmark offered -4.12% and the mid cap category offered an average return of -2.51% in the last one year.

There is no consensus whether the pain is over for these two categories or still more to come. Some mutual fund analysts believe that the categories are likely to see better days because valuations have become better after the recent fall.

It is time for you to reassess your risk appetite. If you are not an aggressive investor, you should reconsider your investments in these schemes. If you indeed have the ability to take risk and withstand volatility, you may continue to invest in these schemes.

If you are new to mutual funds, it would be better idea to seek the help of a mutual fund advisor in your locality. Also, always keep in mind that you should always choose your mutual fund schemes based on your goals, investment horizon, and risk profile.