When markets tumble, small-cap funds usually fall the hardest.
Large-cap funds tend to hold up better.
But over the past two months, it has been the complete opposite.
Why did this happen?
Is it time to invest more in small-cap funds?
A 𧡠x.com
Large-cap funds tend to hold up better.
But over the past two months, it has been the complete opposite.
Why did this happen?
Is it time to invest more in small-cap funds?
A 𧡠x.com
This performance of small-cap funds is in line with the returns of their benchmark.
In the last two months, Nifty 100 fell 8.2%.
Meanwhile, Nifty Smallcap 250 dropped nearly 5.7%.
There are two key reasons for this unusual trend.
In the last two months, Nifty 100 fell 8.2%.
Meanwhile, Nifty Smallcap 250 dropped nearly 5.7%.
There are two key reasons for this unusual trend.
1. The FII Factor
Foreign Institutional Investors (FIIs) are on a selling spree.
In the past two months, they have sold Indian stocks worth βΉ1.5 lakh crore.
Since FIIs mainly invest in blue chip stocks, their selling has hit large-cap indices the hardest.
Foreign Institutional Investors (FIIs) are on a selling spree.
In the past two months, they have sold Indian stocks worth βΉ1.5 lakh crore.
Since FIIs mainly invest in blue chip stocks, their selling has hit large-cap indices the hardest.
2. Earnings Report Card
Only 11% of large-cap stocks had profit estimates upgraded this season.
This number is much better (21%) for small-cap stocks.
This likely explains the stronger performance of small-cap stocks.
Only 11% of large-cap stocks had profit estimates upgraded this season.
This number is much better (21%) for small-cap stocks.
This likely explains the stronger performance of small-cap stocks.
Is It Time To Invest More in Small Cap Funds?
Not really. By any means, small-cap indices arenβt undervalued at this point.
If earnings disappoint in the upcoming quarters, small-cap stocks could fall significantly.
So, a prudent option is to stick to your asset allocation.
Not really. By any means, small-cap indices arenβt undervalued at this point.
If earnings disappoint in the upcoming quarters, small-cap stocks could fall significantly.
So, a prudent option is to stick to your asset allocation.
What portion of your portfolio is invested in small-cap funds?
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