Should I continue with Franklin India Smaller Companies Fund?

Dhirendra Kumar tells what should you do on catching a market high while investing in a smallcap fund

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I made a lumpsum investment in Franklin India Smaller Companies fund around a year back. Since then, I have seen a decline of around 20 per cent in the investment value. What should I do?
- Navneet

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It is a very common mistake done by the investors. You look at the past performance and in your optimism, you invest in one go. All equity investments must be averaged. But this is now done.

I would say that Franklin India Smaller companies fund is a good fund and it has remained one. Smallcap funds have to be held for at least five to seven years to benefit from the full market cycle. You will be actually depriving yourself from its advantages if you are not doing so. If you have some savings to be earmarked, may be you can average your investment downward by investing regularly in this fund. Do that. It will only enhance your income as right now you are stuck with catching a market high in a smallcap fund and it may take many years to recover.

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