Should I continue my mutual fund SIPs or stop and remain invested for another year?
I have been investing in Quant Active, Quant Small Cap, Quant Momentum, and Quant Flexi Cap funds, via SIPs, since last year. My investment horizon is over 10 years. The funds’ performance has slipped over the past two quarters (over the second half of 2024). Should I continue my SIPs or stop and remain invested for another year?
Sumit Duseja, Co-founder & CEO, Truemind Capital (Sebi-registered investment adviser: Quant mutual fund schemes mostly operate on a momentum strategy. The major problem with the momentum strategy is that when it works, the returns are way above the benchmark, but when it doesn’t work, the returns plummet sharply. Therefore, the performance is good only during specific periods of bull market, resulting in inconsistent performance, accompanied by high volatility. Ideally, one should select schemes with consistent performance track records across bull and bear markets. The investment philosophy of the fund house should be simple, clear and transparent. Additionally, you should diversify across mutual fund schemes from different fund houses. Selecting all the schemes from a single fund house puts you at risk with all your schemes underperforming if something goes wrong with the fund house. You can stop your SIPs in the schemes from Quant and restart the SIPs with fund houses that have a proven and consistent track record of at least 15 years.
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Sumit Duseja Co-founder & CEO, Truemind