Small-cap mutual funds have delivered up to 26.38% of returns in 2024. Looking for investing in it? a list of top small-cap mutual funds 2025 is given in this article.
Nidhi | Mar 8, 2025 |
Top Small-Cap Mutual Fund Schemes to Invest in March 2025
Small-cap mutual funds have delivered up to 26.38% of returns in 2024. It again grabbed the attention of investors as it received an inflow of Rs.5,720 crore in January 2025. These schemes invest in the stocks of small companies that are in the early stages of their development.
As per the SEBI norms, the small-cap companies must invest in the stocks of companies ranked below 250 based on market capitalization. These schemes must invest at least 65% in small-cap stocks. These companies are in their early stages, and that is why they are not as stable as compared to large-cap funds. The fund goes through ups and downs, which makes it extremely risky. Small-cap funds are suitable for aggressive investors who have high risk tolerance and those with very long investment horizons.
Due to the higher prices of small-cap stocks and the recent fluctuations, many investors are thinking that the market could face a downturn soon. However, the experts are recommending that investors stay invested in small-cap funds despite the higher valuation to accumulate wealth over a long period. As per the advisors, although the small-cap funds have increased in value a lot over the past six months, investors can still choose to invest in small-cap mutual schemes using a staggered approach, which includes spreading out investments over a long period rather than investing all at once.
Small-cap stocks carry a high level of risk, but at the same time, these schemes have the potential to deliver superior returns in the long run. The small-cap funds have given an average return of 19% over 10 years. One has to go through the volatility phase to get such attractive returns.
Investing in small-cap stocks is not so easy. You must research the fund, including the experience of the fund manager, who has good expertise in small-cap stocks. If you are investing for the first time, consult a financial advisor who will help you choose the right investment scheme according to your financial goals and risk profile.
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