Hello Readers!
How are you all? After top-performing Mid-Cap Funds for the financial year 2020, today we are here with the Best Small-Cap Funds, where investors can consider their investment in the financial year 2020.
Small-Cap Funds are considered a good investment option to create a good corpus for long-term financial goals, like retirement planning, child’s education and many more. Let us know about, what are Small-Cap Funds and about top-performing Small-cap funds.
What are Small-Cap Mutual Funds?
Small-Cap funds are a kind of Equity Mutual Fund, that focuses most of its investment, in shares of companies, that have market capitalization, less than INR 500 Crore and are ranked below 250 in terms of market capitalization.
Small-Cap funds, by investing in small-cap companies, take the advantage of their growth potential in the long run as they are young firms, but at the same time, the risk of investing in small-cap is a bit high than in large-cap and mid-cap companies.
Small-Cap funds invest at least 65% of its assets in small-cap equity, the rest of the assets can be either invested in large-cap, mid-cap or small-cap equity.
Who Should Invest in Small-Cap Funds?
Small-cap funds invest in companies with small market capitalization, which is in young firms or startups. Although these companies have a big potential for future growth and can yield good returns on investment, the returns from these companies are subjected to high volatility.
During the rising market, small-caps can perform their best, while during a downturn of the market, small-caps can perform their worst, thus it is always advised to an investor, invest in small-cap funds, only when they are in the position to carry a high level of risk.
Investors who plan to invest in Small-cap Funds or if already they are an investor of small-cap funds, are also advised to continue their investment for a long tenure, that is approximately for more than five years, investing for long-term would help you reduce the effect of market volatility on your returns, also the longer you invest in the equity market, the higher are the chances to earn good benefits.
Benefits of Investing in Small-Cap Funds
Although Small-Cap Funds are subjected to market volatility, investors investing in small-cap funds are benefitted in many ways, some of which I am listing below:
- Small-cap funds invest in small-cap companies that are more flexible and can adapt changes quicker than the larger companies, and thus can show good growth.
- Small-cap funds tend to perform better than large-cap funds but do remember they are more volatile than large-cap funds.
- Small-cap stocks are priced lower than mid-cap and large-cap stocks.
- Small-cap funds provide a good scale for diversifying one’s portfolio.
Top 10 Small-Cap Mutual Funds to Invests in 2020
We have prepared a list of top 10 best recommended Small-cap funds, for the financial year 2020, after a good analysis of different Small-cap funds. These funds have been selected on the basis of their past returns and performance.
As of now you are aware with the facts related to Small-cap funds also know about the top-performing small-cap funds for the financial year 2020, so plan your investments in small-cap funds, carry it for the long term, and enjoy the benefits from small-cap companies with huge growth potential.
Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best fund, for your investments as per your requirement.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).