My Quant Flexi Cap Investment is Down 8%. What Should I Do?

Ans: Hi Neeraj,

Mutual Funds are a good option for investment. The investment horizon/timeline is very important when you consider equity mutual funds, they need to be invested for the long period (7+ years).

You have only recently started in June 2024, so keeping patience with your investment is important. You can track the progress of your investment but don't get influenced by day to day fluctuation in its NAV. Decisions should be taken based on many factors but do consider 1-2 years duration to see if fund performance is steady, improving or below par compared to your expectation and its peers and the market.

Now coming to the funds you have provided - Quant Large and Midcap and Quant Flexicap are good funds and I think you should be patient. Note - both are actively managed funds and you can expected to see fluctuations in the short term. Stay invested in these 2 funds as they are well diversified and long term prospects look good.
Quant Infrastructure fund is a Sectoral fund and the fluctuations will be high. If your risk profile is very high, then you can continue. There will be a period of time when the sector loses favor in the market and thus the returns will be impacted and during good times it will provide good returns.
Alternately if you decide to exit then include a fund from another fund house which is well diversified and aligns to your risk profile. Some good options to consider - an Index fund based on Nifty 500 (passive) or a multicap fund (active) - to get a a well diversified exposure to Large-Mid-Small cap.
Note- Redemption at this time may attract exit load apart from tax implications for short term.

Regards
Janak Patel
Certified Financial Planner.

Ans: Small cap funds invest in emerging companies with high growth potential.
These funds are volatile, with sharp short-term ups and downs.
They require patience as they perform well over long periods.
Evaluating the Current Situation

A four-month period is too short to judge a small cap fund's performance.
Small cap funds need at least 5–7 years to show consistent results.
Market cycles often affect small cap funds more than other categories.
Negative returns over a short term are normal for this category.
Market Volatility and Fund Performance

Recent market fluctuations may impact small cap returns temporarily.
Small cap funds perform better during market recovery or growth phases.
Historical data shows small caps can outperform over longer periods.
Why Staying Invested May Be the Best Option
Long-Term Potential

Small cap funds reward investors with long-term patience.
Early-stage companies in the portfolio need time to grow and deliver returns.
Recovery in Market Cycles

Small caps tend to recover strongly after market downturns.
A long holding period ensures you benefit from this recovery.
Professional Management

Actively managed funds, especially through MFDs with CFPs, allow expert handling.
Fund managers rebalance portfolios based on market trends.
Switching May Not Be Ideal Right Now
Short-Term Returns Are Misleading

Short-term performance doesn’t reflect the fund’s future potential.
Switching based on 4-month returns could lead to missed opportunities.
Exit Loads and Taxation

Switching now could attract exit loads and short-term capital gains tax.
This reduces the overall value of your investments unnecessarily.
Approximate Investment Horizon
Recommended Holding Period

Small cap funds need at least 7–10 years for optimal returns.
This allows companies in the fund to mature and capitalise on growth opportunities.
Mid-Term Reviews

Review fund performance annually, not monthly or quarterly.
Ensure the fund aligns with your financial goals and risk tolerance.
Key Considerations Before Staying or Switching
Reassess Your Risk Tolerance

Small cap funds are not for low-risk investors.
Ensure you are comfortable with high volatility and short-term losses.
Verify the Fund’s Quality

Check the fund’s historical performance over at least 3–5 years.
Assess the consistency of returns and the fund manager’s expertise.
Ensure Portfolio Diversification

Avoid overexposure to small caps. Balance your portfolio with large and mid-cap funds.
This reduces risk while ensuring steady returns.
Stay Patient and Focused on Goals

Small cap funds demand patience for wealth creation.
Stick to your financial plan without reacting to short-term market changes.
Final Insights
Your investment in small cap mutual funds requires patience and a long-term perspective. Negative returns in the short term are expected but not indicative of future performance. Exiting now could lead to unnecessary costs and missed opportunities for growth.

Continue investing for at least 7–10 years to maximise your returns. Regularly review your portfolio with a Certified Financial Planner to ensure it aligns with your goals. Focus on building a well-diversified portfolio to balance risks and rewards effectively.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: Hello;

If you have invested for the long term(7+ years) then you should not get bogged down by such short term market volatility and drawdowns causing negative returns.

However some allegations of unfair practices against Quant AMC have surfaced.

In the backdrop of these events you may move your investment to another fund in the same category.

Happy Investing;
X: @mars_invest

Ans: You have chosen a disciplined approach to investing. Market fluctuations are normal, and patience is key. Since your investment horizon is five years, your strategy must be optimized.

Reviewing Your Current Portfolio
Your investments are spread across different fund categories.

Equity markets can be volatile in the short term.

Over five years, equity funds can deliver strong returns.

Continuing SIP Investments
SIP investments reduce risk through cost averaging.

Investing consistently helps in long-term wealth creation.

You should continue your SIPs as planned.

Assessing Fund Selection
Multi-asset funds provide diversification but may have lower returns.

Large and mid-cap funds balance growth and stability.

Mid-cap funds have high growth potential but higher risk.

Dividend yield funds provide stability with lower volatility.

Portfolio Optimization
Too many funds can create overlap.

A balanced mix of large-cap, mid-cap, and multi-asset funds is ideal.

You may consolidate some funds for better performance.

Monitoring and Adjustments
Review your portfolio every year.

Rebalance if any fund consistently underperforms.

Avoid reacting to short-term market movements.

Final Insights
Continue SIPs to benefit from market growth.

Diversify wisely but avoid too many funds.

Review performance yearly and make necessary changes.

Stay invested with a long-term perspective.

Keep emergency funds separate from your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

Ans: You’ve taken an active step by starting your ELSS journey.
That itself deserves appreciation.
Now let us review and respond to your concern in full detail.

Understanding the Nature of ELSS Funds
Equity Linked Savings Schemes are equity mutual funds.
They invest majorly in stocks and equity-related instruments.
They have a mandatory lock-in period of 3 years.
So, any investment made in April 2024 can’t be withdrawn before April 2027.

They also offer Section 80C tax benefits.
Maximum tax benefit is Rs. 1.5 lakh in a year.
They are useful for long-term wealth and tax savings.

However, equity funds always carry short-term market volatility.
Negative return after 14 months is not unusual.
It does not mean the fund is bad.

Why You See Negative Returns Today
You invested in April 2024.
Today it is June 2025.
So, the investment is just 14 months old.

Markets have been volatile in this period.
Corrections are common after high growth.
Equity returns never come in straight lines.

Short-term loss in equity is temporary.
In long-term, markets recover and grow.

Even the best performing funds face drawdowns.
This is part of the growth journey.

What Should You Do With This ELSS Fund Now?
There are three key reasons not to exit now:

Lock-In Rule

ELSS can’t be redeemed before 3 years.

You don’t have a choice to exit today.

This lock-in helps prevent panic selling.

Tax Saver Discipline

Tax saving goals must not be disturbed.

ELSS is meant for long-term investing.

Treat it like a fixed deposit of 3 years or more.

Negative Return is Temporary

Do not evaluate an equity fund in 1 year.

A good fund may perform well in 5–7 years.

Short-term fall is not a reason to worry.

So, do not panic or stop your SIPs.
This is part of the equity investing process.
Give time and discipline a chance to work.

How to Monitor Your ELSS Going Ahead
Don’t check value too frequently.
It creates emotional reaction and doubt.

Instead, follow this review plan:

Review only once a year.

Compare 3-year rolling return with category average.

If your fund is below average consistently for 3 years, consider exit.

Exit only after lock-in ends.

Till then, keep investing in regular plans.
Don’t shift to direct funds.

Why You Must Avoid Direct Mutual Fund Plans
Many investors get attracted to direct plans.
They appear to have lower expense ratios.
But hidden costs are higher.

Disadvantages of direct funds:

No fund selection support.

No asset rebalancing advice.

No emotional guidance during market fall.

No help with tax planning or goal setting.

Without expert guidance, mistakes go unnoticed.
Investing with a CFP via regular plan offers real value.

Regular plan gives access to:

Timely review

Goal mapping

Exit timing advice

Behavioural coaching during fall

So even if return is 1% less on paper,
actual gains are more in regular plan with right direction.

Future Approach with ELSS and Mutual Funds
Continue your ELSS investment yearly for tax savings.
Don’t switch funds often.

Select one or two ELSS schemes only.
Avoid spreading across too many funds.

Link each investment with one goal.
For example:

ELSS SIP for child’s education

Flexicap SIP for retirement

Hybrid SIP for vacation or second income

Stick to SIP mode.
It brings cost averaging benefit.
Don’t try to time the market.

Equity Investing Requires Patience and Discipline
You are only 14 months into your investment.
Equity may fall before it rises again.
But over 7–10 years, it outperforms all other options.

In ELSS, three things matter most:

Right fund selected

Staying invested for minimum 5–7 years

Not interrupting SIP during correction

If these three are followed,
you will benefit with:

Tax savings

Capital growth

Wealth creation

Avoid reacting emotionally to market noise.

How to Strengthen Your Investment Strategy Now
Here are steps to build a long-term portfolio:

Define your financial goals clearly

Match funds to the right goals

Review asset allocation yearly

Maintain emergency fund

Complete health and term insurance

Avoid real estate and endowment products

Avoid direct mutual funds

Always consult a Certified Financial Planner

With these steps, your money gets direction and balance.

Don’t Consider Index Funds or ETFs
You may hear about index funds or ETFs from others.
They are low-cost funds that copy market index.
But they carry limitations.

Disadvantages of index funds:

They do not protect in falling market

No fund manager to change stocks

No chance to outperform the market

High exposure to overvalued sectors during bubbles

In falling markets, index funds fall more.
Active funds adjust portfolio to reduce damage.
They can rotate to better sectors.

So always choose actively managed funds for better safety and returns.

Final Insights
Your decision to invest in ELSS is a good one.
Short-term loss is not the end.
It is a small dip in a long journey.
Do not panic and redeem.
Let the lock-in complete.

Stay invested through regular plans.
Track annually.
Invest through Certified Financial Planner for direction.
Build your portfolio slowly with balance and discipline.

Stay calm, stay focused, and stay invested.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment