What are Small-Cap Funds
Small-cap mutual funds primarily invest in companies with a relatively small market capitalization. These funds target companies that are considered to have significant growth potential but may be less established compared to large-cap or mid-cap companies. Small-cap funds aim to identify hidden gems and invest in promising businesses in their early stages. They offer investors exposure to the potential rapid growth and market outperformance often associated with small-cap stocks.
Features of Small-Cap Funds
Focus on small-cap stocks below ₹5,000 Cr.
Opportunity for early-stage investments
Risk and volatility
Benefits of investing inSmall-Cap Mutual Funds
High growth potential
Untapped market opportunities
Benefit from market inefficiencies
Dynamic market presence
Who Should invest inSmall-Cap Funds
Conservative InvestorsSmall-Cap Value Funds that invest in companies with strong fundamentals and undervalued stocks
Moderate InvestorsSmall-Cap Blend Funds that strike a balance between growth and value by investing in a combination of small-cap growth and value stocks.
Aggressive InvestorsSmall-Cap Growth Funds that invest in small companies with high growth potential.
Top Performing mutual funds
| Scheme Name | 5 Y | Value Research | ||||
|---|---|---|---|---|---|---|
 Quant Small Cap Fund - (IDCW) | 41.98% | Invest Now | ||||
Quant Small Cap Fund - (G) | 41.91% | Invest Now | ||||
 Nippon India Small Cap Fund - Direct (G) | 32.93% | Invest Now | ||||
Nippon India Small Cap Fund - Direct (B) | 32.93% | Invest Now | ||||
FAQs
How is a mutual fund categorised as a small-cap fund?
Equity funds that invest at least 65% of their assets in stocks of companies with a market cap of less than ₹ 5,000 cr are known as small-cap funds.
What factors should investors consider when evaluating small cap funds?
Factors such as the fund's track record, expense ratios, management team experience, investment strategy, and volatility should be carefully assessed to ensure alignment with investment goals and risk tolerance.
Are small-cap funds suitable for conservative investors?
Small-cap funds are typically more suitable for aggressive or growth-oriented investors who are willing to accept higher risk in pursuit of potentially higher returns.
Can small-cap funds offer potential for higher returns compared to larger companies?
Small-cap mutual funds have the potential to deliver higher returns over the long term, as smaller companies with strong growth prospects can experience rapid expansion and generate substantial shareholder value.
What is the ideal investment horizon for small cap funds?
Small-cap funds are best suited for investors with a mid to long-term investment horizon of at least 5-7 years to allow the potential for companies to mature and deliver significant growth over time.