Nippon India Small Cap Fund’s five‑year return slid to 11% from 19%, pushing the scheme out of the top quartile and below the sector average of 12%.
The fund’s benchmark index rose 10% over the same period, underscoring the lag against its peer group.
Roongta Securities’ Harshvardhan Roongta warns that such reversals often stem from concentrated holdings and liquidity strain; he notes that a small‑cap scheme holding more than 60% of its portfolio in a single security can face forced sales during corrections.
Investors now scrutinise a manager’s small‑cap experience rather than assuming success in large‑cap markets translates directly. A fund that consistently trails both its benchmark and the category average over one‑, three‑ and five‑year horizons signals a deeper issue.
The next quarterly report, due on March 15, will be closely watched for signs of corrective action, while analysts advise a more conservative tilt for those wary of the sector’s volatility.