Small-cap funds are equity-oriented schemes offered by mutual fund houses. The small-cap funds predominantly invest a major portion of their assets in small-cap companies.
Small-cap companies are the companies that rank from 251st company onwards in terms of full market capitalization. These funds invest a minimum of 65 per cent of their total assets in equity and equity-related instruments. Small-cap funds can deliver very high returns, which evidently come with inherently higher risk. The benefit of investing in small-cap funds is that you invest well in advance in companies that can become top businesses in future.
Below are some of the top small cap funds.