Key Points
Small-cap funds, known for investing in companies with smaller market capitalisations, have always been a focal point of intrigue..
These funds typically invest in businesses in their growth phase, offering high potential for returns but carrying higher risks than mid and large-cap funds..
In 2023, small-cap funds have drawn considerable attention due to their exceptional performance, driven by various economic and market factors...
This exceptional growth in small-cap funds highlights their potential for high returns in this category...
The surge in small-cap funds is partly due to robust domestic investment flows, contrasting with the lesser activity of Foreign Portfolio Investors (FPIs) in the Indian stock market..
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Why Sebi is worried about small-cap mutual fund schemes
06, Mar, 24Given limited buying interest from foreign investors, small-caps represent a relatively illiquid asset class. As such, the exuberance appears both unwarranted and unsustainable, especially in light of an inevitable market correction