Over 1-3-5 years, the average category return is above that of the large-cap and mid-cap category. In 2023, so far the category's average return is over 16 percent, beating all other major equity categories.
With a compound annual growth rate (CAGR) of 30-37 percent for one year, 40-44 percent for three years, and 18-21 percent for five years, the small-cap category of mutual funds has produced remarkable results.
Small-cap mutual funds are a form of mutual fund that predominantly invests in the equities of small-cap corporations. Small-cap companies have a lower market capitalization, which means their total market value of outstanding shares is lower when compared to larger corporations.
Depending on the investment strategy and benchmark used by the fund, different smallcap definition criteria may apply. As a rule of thumb, small-cap corporations frequently have a lower market capitalization than what are regarded as large-cap or mid-cap companies.
Investing in small-cap mutual funds can offer certain advantages and reasons to be watchful.
Advantages
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