What is a small-cap Stock Fund?
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What is a small-cap Stock Fund?
A small-cap fund focuses mainly on investments in small-cap stocks. If you’re not already familiar with the concept, the term “small-cap” refers to companies that have a total market capitalization of $300 million to $2 billion. A small-cap ETF is a fund that trades on an exchange just like a stock.
How do small-cap funds work?
In a small-cap fund, the fund manager invests at least 65\% of the portfolio in small-cap stocks. Small-cap stocks give individual investors an edge over institutional investors.
Are small-cap funds a good investment now?
The best reason to invest in small-cap stocks is their greater potential to deliver outsize returns than larger companies. For instance, it’s considerably easier for a $1 billion company to become a $10 billion one than it is for a $100 billion company to grow to $1 trillion.
Are small-cap stocks riskier?
Small-cap companies tend to be riskier investments than large-cap companies. They have greater growth potential and tend to offer better returns over the long-term, but they do not have the resources of large-cap companies, making them more vulnerable to negative events and bearish sentiments.
Which Small Cap Fund is best 2021?
| Mutual fund | 5 Yr. Returns | Min. Investment |
|---|---|---|
| Union Small Cap Fund – Direct Plan – Growth | 20.12\% | ₹5000 |
| SUNDARAM SMALL CAP FUND Direct Plan – Growth | 16.51\% | ₹100 |
| HSBC Small Cap Equity Fund – Growth Direct | 18.96\% | ₹5000 |
| IDBI Small Cap Fund Direct Plan – Growth | — | ₹5000 |
Is small-cap high risk?
Is it safe to invest in small-cap fund?
Small-cap funds can perform exceptionally well during a bullish market phase. However, these funds can go through some difficult market phases, leading to an abrupt fall in their returns. Investors should practice caution while investing in these funds.