Mutual funds diversify investments between mid and small-cap companies and are termed as mid and small cap funds.
A mid-cap fund is a type of investment fund which focuses its investments on companies with a capitalisation in the middle range of stocks in the investable market.
The opportunity for investment in mid-cap funds is high due to the low identification factor in the market. Another important feature of these mid-cap funds is that they tend to grow in size as more investors get involved. The net effect is that a huge amount of money is invested against a few stocks.
A small-cap fund is a type of equity mutual fund which invests a majority of its assets in the stocks of small-cap companies (companies which rank 251st and more in terms of market capitalisation). Nearly 95 percent of all India listed companies are small cap companies.
Small-cap funds can be volatile because they invest in companies that are less stable than large-cap companies.
In general, companies with market capitalisation up to Rs 500 crore are termed as small and companies with a market capitalisation over Rs 500 crore, but below Rs 1,000 crore are defined as medium-sized firms by the mutual fund industry. Mid-cap funds bear high-risk factors and thus offer high returns in case of positive movements of the indexes.
Your guide to the latest cricket World Cup stories, analysis, reports, opinions, live updates and scores on https://www.firstpost.com/firstcricket/series/icc-cricket-world-cup-2019.html. Follow us on Twitter and Instagram or like our Facebook page for updates throughout the ongoing event in England and Wales.
Updated Date: Jun 25, 2019 16:59:49 IST