Small cap funds are a type of mutual fund that primarily invests in small-cap companies, which are typically defined as businesses with a market capitalization between $300 million and $2 billion. These funds offer investors an exciting opportunity to tap into the growth potential of emerging companies that often outpace their larger counterparts during market rallies.
Investing in small cap funds can provide several advantages. Firstly, these companies tend to have more room for growth, which can lead to significant capital appreciation over time. Secondly, small cap funds often diversify their investments across various sectors, helping to mitigate risks associated with individual stocks.
Managed by experienced professionals, small cap funds benefit from expert analysis and strategic decision-making, making them a smart choice for investors looking for professional management. They are particularly suitable for long-term investors who are willing to navigate market volatility in pursuit of higher returns.