This Is What You Should Consider While Investing in A Small Cap Fund

Timing the market is a key to good investment. And Small Cap Funds offer you just that. Good Small Cap Funds generate meaningful returns for investors. There could be a historic investment opportunity in Small Cap Funds.
 

• FUND COMPOSITION: A Small Cap Fund seeks growth by investing in fastgrowing and innovative companies, so peek into the scheme's investments to check for its credentials.
• SCHEME OBJECTIVE: Small Cap Funds aim to generate long-term growth by investing primarily in Equity and Equity-related Stocks of Small Cap companies. Make sure your investment objective is aligned with the scheme's objective.
• INVESTMENT TIME HORIZON: These funds may be a good fi t for you if you are looking to stay invested over a long-term horizon of 7 or more years.
• RISK APPETITE: Even though, investing in Small Cap Funds is risky since they are easily impacted by the volatility of the market, a Small Cap Fund may provide you with a potential highgrowth opportunityand balance your overall conservative portfolio construct. Ensure you evaluate your risk appetite before making an investment decision.
• FUND MANAGEMENT: A good Fund Manager with his/her extensive knowledge and expertise ensures the selection of the right Small Cap companies with the potential of growing your money at reasonable valuations to mitigate valuation risk.
• FUND PERFORMANCE: A suitable Small Cap Fund allows you to compare the scheme's returns against the Benchmark, such as the NIFTY SmallCap 250, to understand its actual performance. Look into the past performance of the scheme to understand the risks involved and its overall returns. But since no one can predict the future, look at the scheme's track record and consistency to make your investment choices. Since past performance is not a guarantee of how the scheme will perform in the future, it is important to periodically review your investments and understand its progress.
   

If you're seeking to strike a balance between risk and return, Small Cap Funds are an option worth considering. A bottom-up Stockpicking approach is the way forward. Speak to your Mutual Fund Distributor to identify the right Small Cap Fund for your investment needs and benefit from its long-term trends.