A few days back, I had bought a baby fish… in a small aquarium. Since then its a decent bit of hard work … changing water … feeding her. But the most difficult but exciting part is to wait patiently to see the fish grow up little by little.
Let’s talk about food. Have always found the most delectable recipes involve a lot of time. Whether its the rich Daulat ki Chaat, the sweet Soan Papdi or the juicy Rasgulla … one common essential ingredient is Patience.
For Patience is a Golden Virtue. Whether its fruition of your dream or achieving your investment goal … patience is the magic word.
Talking of investments … Mutual Funds are coming up with a number of N.F.Os. One of the most promising fund categories to look out for is the Small Cap Funds. But why so …
Whenever the term ‘Small-Cap’ is discussed … doubts of security of funds securely creep into our minds …in default mode. But let’s think rationally…
Last year, the then expensive Small Cap valuations corrected heavily. Nifty Small Cap 250 price to earnings (PE) ratio fell from a high of 121 in August 2018 to the current level of 46.2. The S&P BSE Small-Cap index has corrected by 19.2% from its peak of 18,402 on April 30, 2018, to 14,873. In fact, 75 % of the actively managed midcap and smallcap equity funds outpaced their respective benchmarks for the full year.
Most of the companies selected by the fund houses are well researched … quality of management, order book size, future growth prospects well analyzed. Another aspect is … this fund category offers a lot of sectoral diversification … a refreshing change from the banking sectoral overweight. If you want to invest in sectors like Chemicals, Sugar, Sanitaryware, Microfinance Companies … the best way is through these Small Cap Funds
More over since its Mutual Funds… the market risk is diversified. And if its a SIP with a long term perspective … the combination is unmatched.
There is a new optional concept called Smart Trigger Enabled Plan …now available during NFOs. A fixed percentage of the fund is triggered to move from a Liquid fund to the Equity Fund …at every predefined fall of the respective market index.
So if you believe in themes like ‘Small can Grow Mighty with Time’ … don’t just introspect …but invest.
As the popular Hindi maxim goes…. ‘Sabar ka phal meetha hota hain’…