S Naren warns that SME IPOs are the most hazardous segment of the market.

Indeed, SME IPOs are the most risky segment of the market, according to S Naren, the Chief Investment Officer (CIO) of ICICI Prudential Mutual Fund. Retail investors should steer clear of SME IPOs, according to Naren, who has expressed worries about their quality. Citing largecap stocks' better performance, he also advises investing in them rather than small and midcap stocks.

Naren's remarks follow an average return of almost 86% from 240 SME IPOs in 2024. Naren added that the regulator is worried about the derivatives market and SME IPOs.S Naren, the CIO of ICICI Prudential Mutual Fund, has cautioned retail investors against investing in what he refers to as the most risky segment of the market, given that 240 SME IPOs had an average return of almost 86% in 2024.Even with SME IPOs, where we have been concerned about the quality, investors have been optimistic about IPOs. Although we are fortunate not to be required to take part in them, we are rather concerned about the caliber of initial public offerings. Additionally, the regulator has been concerned about the derivatives market as well as SME IPOs," Naren said reporters during a briefing.