CNN Central News & Network–ITDC India Epress/ITDC News Bhopal: When it comes to investing in small cap funds, the fear of risk often dissuades investors. However, it is important to consider that taking a more structured approach to investing can help in mitigating market risks.

The Bajaj Finserv Small Cap Fund is designed with this philosophy in mind. It comprises strategic insights and disciplined execution to help investors explore more opportunities in the small cap market.

Understanding small caps

Small cap funds consist of companies that typically rank 251st and beyond in market capitalization as per SEBI’s guidelines. These businesses are often in their novice stages, operating in emerging sectors, this means that they have a potential to scale rapidly. While this can come with a higher volatility, it can also potentially create space for long-term value discovery.

What differentiates small caps from others is their potential to bounce back from market fluctuations. Hence, through the suitable selection process, small caps can potentially help grow wealth in the long run, making them a viable part of a broader mutual fund portfolio.

Risk isn’t the enemy

It is essential to understand and manage risk when investing in small cap funds instead of fearing it. Unlike large cap companies that can already be priced efficiently in the market, small caps can be mispriced or overlooked presenting an opportunity for a potential entry point into the market.

Instead of trying to avoid risks, you can take a structured approach which can help you mitigate market volatility. This includes diversifying across sectors and tracking company fundamentals while being mindful of governance quality.

The Bajaj Finserv Small Cap Fund approach

The Bajaj Finserv Small Cap Fund has a 3-in-1 advantage of Growth, Quality and Value. The fund’s framework seeks out companies that are scalable, fundamentally strong and trading at prices lower than their intrinsic value. The fund is influenced by Bajaj Finserv AMC’s proprietary INQUBE philosophy. It is managed by an experienced team that applies both top-down trends and bottom-up stock analysis.

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