small cap funds
Small-Cap Mutual Funds are specialised investment vehicles that focus primarily on equity or equity-related instruments of small-cap companies, defined by the Securities and Exchange Board of India (SEBI) as those ranked below the 250th position in market capitalisation, with a total market cap of less than Rs. 5000 crores. These funds are mandated to allocate at least 80% of their assets to such companies, providing investors with exposure to a segment of the market that has significant growth potential.
While small-cap funds can offer remarkable returns due to the inherent growth opportunities of smaller companies, they also come with a high level of risk. Market volatility can greatly affect the share prices of these companies, making them more susceptible to fluctuations. Therefore, these funds are generally suited for investors with a higher risk tolerance and a long-term investment horizon, as small companies typically require time to realise their growth potential.
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