'Don't fall for fear mongering': Edelweiss CEO Radhika Gupta on small and mid-cap risks

This comes after S. Naren, the CIO of ICICI Prudential Mutual Fund commented last week that small and mid-cap valuations were absurd

Edelweiss Mutual Fund CEO Radhika Gupta took to social media to express her views on the matter of small and mid-cap valuations and risks after veteran fund manager S. Naren urged investors to exit the segment.

Radhika Gupta hospitalised after head injury, praised swift Indian healthcare recovery.(Instagram/Radhika Gupta)

“Don't fall for fear mongering or 10 day debates,” Gupta wrote in a post on X in response. “Focus on finding a good manager and holding for 10 years, in a sensible balanced way.”

This comes after S. Naren, the CIO of ICICI Prudential Mutual Fund, commented last week that small and mid-cap valuations were absurd and that Systematic Investment Plans (SIPs) work best in volatile and undervalued asset classes.

Gupta listed out four aspects for investors regarding this:

"1. Everything including mid and small is good in balance. Even an average flexi cap fund has a 30% allocation to this category.

2. If you look at the returns of anything from the top of the cycle to the bottom (e.g. 2006 to 2013), they will not look pleasant.

3. Liquidity is very important and can be managed. We have disclosed liquidity numbers in our funds well before regulators asked and maintain this liquidity, without taking cash calls or holding a lot of large caps.

4. The critical thing that no one can disagree about is that the key to making money is to hold on to SIPs for a long time. 10 years. More."

She then added that Edelweiss' midcap fund which was launched in 2007 (acquired from JPM) gave a minimum return of 10% rolling 10-year lumpsum returns while the minimum SIP return for the regular plan was 8%.

“Nothing can convince me these are bad numbers,” she concluded. “And no negative returns in 10 years. I would post a small cap, but we launched only in 2018.”