Small Cap equity funds invest in India’s smallest firms. These firms are not among the top 250 and are generally unheard of in our everyday lives. While small size firms can provide tremendous profits, they are extremely volatile and can result in losses in the short to medium term. These mutual funds select stocks for investment from the small cap category, which includes all stocks except largest 250 stocks (by market capitalization).

Advantages of Small Cap Funds

1. Benefit from early investment in firms that have the potential to be top enterprises in the future.
2. Exposure to excessive risk as a result of insufficient financial power to handle difficult market circumstances
3. Ideal for extremely aggressive investors with a 7-year or longer investment horizon.