With several fund houses restricting investments in their small-cap funds and the markets regulator also now expressing concerns over frothy valuations, individuals must exercise caution. They should opt for systematic investment plans (SIPs) and avoid lumpsum investments in this segment, say experts. Before investing in small-cap funds, investors must note the fund size. If it is too large, then generating alpha would be difficult. Individuals should stay invested for over five years to earn higher returns. And the return expectations need to be around long-term averages and not what the market has delivered over the past one year.
ETFs trade like small-cap stocks as SEBI bans MFs’ overseas investment
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