If you can live with volatility, funds focusing on small cap stocks are just up your street. Since April 2005, when the BSE Small Cap Index was setup, six funds have been launched that focus on investing predominantly in small cap stocks. For investors these funds benefit in two ways: you get diversification in this segment of the market and you also benefit from stocks that are well researched and whetted by fund managers.
We analysed the portfolios of the five schemes with significant history (See: Small Wonders) to ascertain the stocks that pushed the performance of these funds in the past one year and those that dragged it. The outcome is unique, the top 5 stocks that these funds invest in throws a wide universe. The focus on small-cap stocks demonstrates the confidence the market has in this segment.
However, it's also a known fact that small caps are notoriously volatile. These funds can touch soaring heights when the markets are favourable while they can also wipe out fortunes when the tide reverses.
Evolved investors who can stomach the risks benefit from these funds as they add a lot of zing to their portfolios. They can also benefit from the well researched universe of stocks in which these funds invest and use the insight to invest directly in small cap stocks and reap the benefit of small cap funds.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
