Small-cap mutual funds have emerged as the best-performing equity category over the past six months, delivering an average return of nearly 21.26%, outperforming other domestic equity categories and international funds, an analysis by ETMutualFunds showed. The category has also maintained its momentum over the last one month, raising questions about what is driving the sharp recovery and whether the rally can sustain.
Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance told ETMutualFunds that the recent rise in small caps appears to be a rebound from earlier declines, supported by improved investor sentiment, increased domestic liquidity, selective stock picking by fund managers and expectations of stronger earnings.
