Small-cap funds offer diversification with investment across an average of 82 stocks, reducing risks considerably.
Your portfolio allocation generally reflects your risk appetite. We, hence, suggest investing at most 10-20% of your portfolio in small caps to reduce risk.
Given the high volatility in the short-term, we suggest keeping an investment horizon of at least 7 years for small caps. The longer the investment, the better they perform.
SIPs in small caps effectively help in maximising returns with minimal risk.
Check the latest edition of Mutual Fund Insight’s cover story, titled ‘Electing a bright future’, to get the answer. To be more specific, it’s the last paragraph of page 32.