Even the fifth best fund – Kotak Small Cap – delivered annual returns of 24.2% in the last ten years! The best – Nippon India Small Cap – gave 29% returns!
A ₹1 lakh investment in Nippon India Small Cap would have grown to ₹12.9 lakh in just 10 years. But it is not all smooth sailing.
Small-cap fund investors expect a smooth journey.
But small-cap funds can experience long-ish periods of zero/negative returns. So, investors need to be patient and think long-term.
- You can handle market swings - You have the patience to stay invested for at least 7 years. Any idea to make a quick buck from small-cap fund investing can backfire.
- It’s easy to get attracted by small-cap funds’ high returns. But don’t allocate more than 20% of your money there. They can be volatile.