Performance of small-cap stocks has been bleak recently. Since the Union Budget:
b) Mid-cap index lost around 4%
c) Small-cap index lost nearly 16%
Overall weight of small-caps in portfolio should be less than 25%
Invest 75% of funds in large-caps
This can protect against market volatility
Small-caps are riskier than large-caps
But in small-caps too, there may be well-known, tried-and-tested options
During market uncertainty, select these stocks instead of unknown risky stocks
In the small-cap segment, any stock can fail
That’s why invest in at least 10 companies to hedge against loss
Invest equally in all these stocks
This way, you can ensure that not all stocks perform poorly
Invest in small-mid cap companies with a long term approach
Identify financial goals you want to achieve in 5-10+ years and invest towards them
Avoid debt-burdened companies
Invest fixed portion of total corpus for mid-caps
Remain invested till the stock is not growing more than 4 times
There are a lot of industries in the small-cap segment
Steel, pharma, mining or agriculture, for example
Do you have in-depth knowledge about any industry?
Invest in small-cap stocks of that industry
This can reduce your risk and increase your investment competence
Small-caps are generally riskier than other segments. In times of volatility, there are chances of losing money. But, they have the potential to offer high returns with sensible money management. So, hedge your investments to try and minimize losses.
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