What are your views on small and midcap funds for the next three years considering the various possible outcomes of the general elections?
- Ejaz
It is quite difficult to answer this question. But I would say that small and midcap funds do very well in a full market cycle and are extremely disappointing in a bad market. The long-term returns of these funds have always topped the charts among categories. But they come with their own set of risks like their vulnerability during market downturns.
In India, specifically, I think there will be greater opportunities for relatively smaller and mid-sized companies to attain high scale profits. But it comes with a higher risk. So I don't know definitely about the next three years, but over a period of three to five years in a full market cycle, smallcaps should do well.
This article was originally published on March 06, 2019.
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