One of my friends recently asked me if investing into a small cap fund pays rich dividends? He had done his part of some quick online research and browsed through the historical returns of quite a few top performing funds in this category. He was quite naturally drawn by looking at handsome returns paid by few of the fund houses
Let me keep it simple for all of you and get straight to the point. I would say don’t get tempted by small-cap funds as they are not meant for everybody. Confused are you? Don’t be.
These funds are suited for somebody who is willing to take risk (when I talk about risk please understand that these funds will give you a very bumpy ride); The principles you need to follow are – keep investing into these funds regularly and do not turn finicky when you see the investment value declining steadily for a prolonged period of time. These small cap funds usually start rewarding you usually after five-seven years because that is when investing in these funds becomes extremely rewarding. So, if you don’t have that stomach and if you don’t have that heart, don’t even think about it. Most investors can do without investing in a small-cap fund. Now, the choice is yours.
Simplified Money Talks 