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MF return vs investor reality: Small-cap funds gain 15%, but investors lose money. Here's how
Mint 54 min ago·8 Sept 2026, 5:22 pm
Small-cap mutual funds have delivered strong returns of 15% over the past year, yet many investors in these schemes have actually lost money. This disconnect occurs because investors often buy into these funds after a rally has already begun, paying a high price. As a result, they miss out on the initial growth phase and may see their portfolio value decline even when the fund's benchmark performs well.
The primary reason for this underperformance is poor timing. Market timing is extremely difficult, and retail investors frequently chase funds that are already trending upward. This 'late entry' strategy exposes them to higher volatility and potential losses when the market corrects. To avoid this, investors should focus on long-term investing and stay invested through market cycles rather than trying to time the market.
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