Investing in small-cap funds can be a powerful strategy for long-term wealth creation—if you understand well when, why and how to invest wisely. Small-cap funds basically focus on companies with smaller market capitalisation. They offer great growth potential but also come with increased volatility. Here is how you can approach them like a pro.

What are small-cap funds?

Small-cap funds are a mutual fund category that invest in companies ranked 251st and below in terms of market capitalisation. Such businesses are smaller in size, newer, and often operate in niche sectors. They usually have a market cap of less than ₹5,000 crore.

As per Securities and Exchange Board of India (SEBI) regulations, small-cap funds must invest at least 65% of their assets in small-cap stocks.

Why invest i

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