Guidelines

What is a small-cap Stock Fund?

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.

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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.