Everything About Small Cap Fund

Small Cap Mutual Funds in India are mutual funds that invest in small-cap companies, which are companies with a market capitalization of less than Rs. 5000 crores. These funds are ideal for investors who are looking for high-risk high-return investments and have a long-term investment horizon. In this answer, we will discuss everything about small-cap mutual funds in India.

Features:

• Small-cap mutual funds are mutual funds that invest in small-cap companies. These companies are those that have a market capitalization of less than Rs. 5000 crores.

• Small Cap Mutual Fund focuses on small-cap companies leading to higher risk exposure as small-cap companies are not well-established businesses.

• They may face tough times during a recession, but when a small-cap does well, the possibility of growth is higher than for mid-caps and large-caps.

• Small-cap funds are highly volatile and can fluctuate rapidly.

• Minimum 65% of the corpus needs to be invested in shares of Small-cap companies.

Overall, Small-cap mutual funds are suitable for investors with a long-term investment horizon of at least 5-7 years. It is important to note that small-cap mutual funds should only form a part of a well-diversified investment portfolio. These mutual funds are considered to be high-risk investments, as they invest in smaller companies that have a higher degree of volatility and uncertainty in their business operations.