SIPs In Turbulent Times | Should You Pause Your Smallcap SIPs?

A recent analysis of smallcap SIP investments revealed that since the Nifty peak in September, investors have experienced losses in all 29 schemes, resulting in a negative XIRR of up to 46%. Approximately four funds exhibited negative XIRR of over 40% for SIP investments made on October 1st of last year. According to a recent report from Motilal Oswal Asset Management Company, as of January 31st, broad-based indices were displaying short-term negative returns, although they remained positive over a one-year period. There has been a lot of scrutiny on the effectiveness of SIP investments due to the negative returns experienced. This investment method has gained significant popularity in recent years. In the year 2024, mutual fund investments through SIPs reached Rs 2.89 lakh crore. According to veteran fund manager S Naren from ICICI Pru AMC, investors should exercise caution when considering SIP investments in mid and small-cap stocks. During a recent address at the IFA Galaxy 2025 event, Naren advised it is prudent to completely withdraw from small- and mid-caps at this juncture. He emphasized that the year 2025 could pose significant risks, akin to the challenging period observed between 2008 and 2010, where many investors suffered losses, especially in the banking sector. However, experts feel the coming months can be better than before.Watch Feroze Azeez, Deputy CEO, Anand Rathi Wealth, and Pankaj Mathpal, Founder & MD, Optima Money Managers, discuss SIP investment strategies and the road ahead.