Mutual funds: Experts recommend this investment strategy for small-cap MF investors

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Systematic Investment Plan or SIP route to get the desired results. “Instead of focusing solely on one top-performing scheme, investors should allocate their investments among 2-3 schemes and diversify their exposure across a number of different funds," said Mukesh Kochar, National Head - Wealth Management, AUM Capital. Cautious investment strategies, such as SIPs, top-ups, and diversification, are important for investors aiming to capitalize on the potential of small-cap funds, added Kochar While investing in small-cap funds investors should remain cautious as small-cap funds are high in volatility.

Tax and investment expert Balwant Jain said investing in a small cap inherently has a risk of selection due to the very large universe. “In my opinion, one should invest in small cap through investing in an index fund. Nippon 250 small-cap fund represents the top 250 small-cap companies.

Index funds have a lower expense ratio so one can invest here. One has to have a long-term view while investing in a small cap. One should go for small-cap funds only if he has a minimum of 10 years of investment horizon," said Jain.