My SIP portfolio is currently experiencing a devaluation. Do I stop putting my money further? Expert says no panic selling

My SIP portfolio is currently experiencing a devaluation of approximately 20-30% due to the ongoing market downturn. I have also invested in NFOs. My investment horizon extends beyond 10 years. However, the performance of the funds has dipped over the last two quarters (during the second half of 2024). Given this situation, I am seeking your prediction for the upcoming months and your recommendation on whether I should consider withdrawing my investment or do you suggest me to diversify.

Advice by Rajani Tandale, Senior Vice President, Mutual Fund at 1 Finance

Approximately 20-30% of active systematic investment plan (SIP) accounts do not contribute to monthly mutual fund (MF) inflows, as reported by the Association of Mutual Funds in India (Amfi). This suggests that a significant portion of SIP accounts are either inactive or experiencing transaction issues regularly.

If your portfolio is down by 20-30%, it indicates a high exposure to mid and small-cap stocks. These segments tend to be more volatile and have corrected significantly more than large-cap stocks in the current market downturn.

Avoid investing in random NFOs

New Fund Offers (NFOs) lack a track record, making it difficult to evaluate their performance. Instead, prefer existing mutual funds that have a proven track record and strong fundamentals.

Consider Flexi-Cap funds for better risk management

As a long-term retail investor, investing in flexi-cap funds can be a better strategy. These funds allow the fund manager to dynamically allocate capital between large-cap, mid-cap, and small-cap stocks based on market conditions. This flexibility enables better risk management and timely adjustments to market trends.

Avoid panic selling - Seek professional help

Instead of randomly withdrawing money, consult a qualified financial advisor who can assess your portfolio and suggest the best course of action. Tax loss harvesting—where you use temporary losses to offset taxable gains—could be an opportunity, but it requires careful calculation, which an expert can help with.

Final Advice:

Stay disciplined and avoid making impulsive decisions based on short-term market movements.

Use this phase to reassess your portfolio allocation and make necessary adjustments with expert guidance.

Think long-term—market volatility is temporary, but well-planned investments yield results over time.