How to
Reduce Risk
in the Portfolio of Small-Cap Funds? Small-cap funds invest majorly in equity securities of small-cap companies. Let’s seek ways to reduce risk!
1 Remain Disciplined You should start investing in a small-cap fund with a well-defined objective, past performance record, and fund manager’s experience. To achieve risk-adjusted returns, the investors are required to be disciplined to achieve success over a long-term horizon.
2 Diversification A smart investor never puts all of his investment in only one fund. Risking your portfolio with the load of one fund may increase the risk during the market volatility. So, it is wise to choose different categories of funds in the portfolio with varying risk appetite.
3 Invest Through SIP When an investor start investing in a small-cap fund through SIP, he/she reduces the overall risk in the portfolio to sustain the market volatility. Through SIP, the investor purchases more units during the market downturn and fewer during the market upturn.
4 Invest In Known Areas Every investor is specialized in a particular area. When you invest in an area where you are comfortable, it is easy to judge the fund on different market conditions. This approach helps the investors to reduce risk and invest in emerging opportunities.
5 Pick the Trusted Fund There are many small-cap funds which are tested during the market downturn and have long-term track record of healthy returns. An investor can choose those tested and tried names from small-cap funds list to generate risk-adjusted returns in the long-run. https://www.mysiponline.com/mutual-funds/small-cap
What Can an Aggressive Investor Expect from Small-Cap Funds? For the aggressive investors, small-cap funds are a good choice as they are capable of generating higher returns. The highest returns from small-cap funds on a year rolling basis in a 10-year tenure is 197.5%. However, the investors are required to manage their portfolio on a regular basis to get risk-adjusted returns in a long-term. https://www.mysiponline.com/
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Mutual fund investments sre subject to market risks., read all schemes related documents carefully