Small-cap Funds Still Lucrative?
Ninad Ramdasi / 13 Jun 2024/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund
Your cover story in the previous edition was pretty insightful and cleared many doubts that I had.
Your cover story in the previous edition was pretty insightful and cleared many doubts that I had. But given the current volatile nature of the Indian equity market will Small-Cap funds continue to be lucrative as before? - Ranjana Pardeshi[EasyDNNnews:PaidContentStart]
Editor Responds : Thank you for writing to us. The current volatility in the Indian equity market presents a complex scenario for small-cap funds. On the one hand, small companies are inherently riskier. Their stocks are more susceptible to market fluctuations, meaning the value of your investment could swing dramatically during volatile periods.
However, there's another side to the coin. Small companies often have the potential for much higher growth compared to their larger, more established counterparts. This higher growth potential can be very lucrative for investors with a long-term horizon (ideally 5+ years) who can tolerate short-term volatility. Market corrections can even present a buying opportunity, as small-cap stocks might become undervalued.
Ultimately, the question of whether small-cap funds remain lucrative depends on your circumstances. You can consider including a mix of asset classes in your portfolio, such as Large-Cap stocks, bonds, and real estate, to mitigate risk.
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