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Should I invest in a closed-end microcap fund?

Dhirendra Kumar tells why it is not advisable to invest in a close-end fund

Should I invest in a five year closed-end micro cap fund by Sundaram Mutual Fund?
- Arvind

Transcript: Normally, you should avoid investing in closed-end funds. It is very important for a small equity investor to average his purchase cost through SIP. And when you invest in a closed-end fund, you can invest only at the beginning. Another reason is liquidity. In a closed-end fund you cannot withdraw your money before the stipulated time, five years in this case. Technically, they are listed but no-one trades in closed-end funds. So, you won't be able to retrieve your money before five years, even if you need it. Closed-end structure is good for a micro or small-cap fund but according to me averaging out through regular purchases and liquidity is an important factor for investors and you should look at other options and not just closed-end funds.

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