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Small caps have given good returns during the last one and three years creating a lot of interest among investors. Is it a good time for small-cap funds? Let us hear from our industry experts.
RIA Bhanu Prasad, Andhra Pradesh
Bhanu Prasad says investing in small-cap funds is not advisable. If at all an investor wants to invest, then a diversified fund with a 10 to 20 % allocation to small-cap funds should be selected.
MFD Chokkalingam Palaniappan, Founder and Director, Prakala Wealth
Chokkalingam recommends investing in small-cap funds only if investors are willing to start an SIP for the long term with a time horizon of seven years or more. Investing a lumpsum amount in a small-cap fund is not recommended, Chokkalingam advises if the investor insists on investing a lumpsum amount in a small-cap fund, he should take the STP route.
MFD Nikul Parmar, Mumbai
Small-cap funds are at their highest valuations right now and looking at the market conditions there is a possibility of market corrections. If that happens, we could see small cap going down by 20 to 40% as has happened earlier. So, it's better to avoid investing in a small-cap fund.
MFD Shifali Satsangee, Founder & CEO, Funds Ve'daa
Investing in small-cap funds is not advisable considering the high valuations. I would personally say "No" to a client who approaches me and requests to invest in small-cap funds. If the investor still insists, I may advise the client to begin an SIP for a longer duration of 7 to 10 years.
