Small-cap stocks typically have the highest growth potential as the underlying firms are young and are aggressively seeking to expand.
They are more vulnerable than large and mid-caps to a business or economic downturn, making them more volatile.
Investors who are interested in investing in small-cap space and may not have the time to research but have the high risk-taking capacity
may look to invest in small-cap funds. Small and mid-cap funds generally outperform large-caps on a bull market (Chart 2), but decrease more when
the sentiment is bearish.
Small Cap Fund :Such mutual funds pick investment
stocks from the class of small caps, which comprises all stocks except for the largest 250 stocks
(by market capitalization).