NEW DELHI: ICICI Pru AMC’s fund manager S Naren’s take on systematic investment plans (SIPs) has sparked a debate in mutual fund industry. Speaking at the IFA Galaxy 2025, an event organised by a Chennai-based mutual fund association, Naren advised it is a “clear time to take out lock, stock, and barrel from small- and mid-caps.”
“…I believe that investors who have started SIPs from 2023 in small and midcap, they’re going to have a very bad, very bad experience. Is this a time to take out money from small and midcap? We think it is a clear time to take out lock, stock, and barrel from small and midcap,” said Naren.
He added that this is the time to even stop small and midcap SIPs because they’re so overvalued. He explained that SIP has to be done in volatile and undervalued asset classes. If you do SIPs in overvalued asset classes – like China three years ago, or Indian equities in 1994 or 2007-2008 – you only have yourself to blame, he said.
Naren also highlighted that 2025 could be the most dangerous year since the 2008-2010 period when investors had lost a lot of their money. He cautioned that the momentum in small and mid-cap stocks is starting to fade. Naren’s remarks come at a time when the Indian equity market, especially the midcap and smallcap stocks, is going through a correction phase after 4-year strong bull run. So far in 2025 alone, Nifty midcap and smallcap indices plummeted 10-11% each.
Radhika Gupta, CEO of Edelweiss Mutual Fund said that one should not fall for the fear-mongering 10-day debates. On social media platform X, Gupta said that everything including mid and small is good in balance and even an average flexi cap fund has a 30% allocation to this category. She also said that it’s essential to stay invested in SIPs for the long term, ideally 10 years or more.
Aashish P Sommaiyaa, CEO of WhiteOak Capital, without taking Naren’s name, wrote on social media, “If the market goes up I am a star manager. If market goes down you gave me money at wrong time and started your SIP at peak.” He said,
“No brownies for avoiding volatile asset classes or smoothening the journey proactively. But lot of brownies for enabling risk taking, launching one narrow sectoral NFO per month and then taking a dump on distributors, industry peers, issuer companies and investors. Conduct with contradictions and cognitive dissonance yet gaslight the world.”
‘Momentum in small, mid-cap starting to fade’
S Naren cautioned that the momentum in small and mid-cap stocks is starting to fade. Naren’s remarks come at a time when the Indian equity market, especially the midcap and smallcap stocks, is going through a correction phase after 4-year strong bull run.