Franklin India Smaller Companies Fund; Is it Time to Focus on Small-Caps?
The small-cap segment of the equity market has been going through an extended downtrend for a long term. Due to this, many of the small-cap mutual funds including Franklin India Smaller Companies Fund have been providing depressed returns for a while. However, experts are expecting that the recovery is nearby as the trends in the market are showing signs of a surge in the small-cap category and this can also boost the small-cap mutual funds which are struggling to maintain positive returns for a while. Let’s find out what the experts at MySIPonline suggest on this.
Why Invest in Small-Cap Fund?
Due to continuous under-performance, it is a tough task to invest in small-caps knowing that they haven’t performed well for a long time. Small-cap industries have faced resistance to prosper in the current market condition due to multiple reasons. But the things are likely to change in the upcoming years. The government is taking steps to support the growth in the small and mid-cap segment. We can expect a comeback in the emerging segment in the next few years. Apart from this, the stocks are available at very attractive valuation as they are trading at very low levels. The price to earning ratios of most of the small-cap stocks have turned out to be very attractive and any upward movement is likely to deliver phenomenal returns to the investors. Investment should be continued with discipline at current levels to gain better wealth in the long term.
Investors need to understand that to gain better returns from mutual fund investment, it is essential to continue investing when the NAV is low. If the investment is only done whenever the concerned mutual fund is performing well, it won’t be able to deliver adequate returns.
Why Choose Franklin India Smaller Companies Fund?
Franklin India Smaller Companies Fund has a well-diversified portfolio and the corpus is spread out in a large number of stocks from multiple sectors. This gives enough diversification to the investors and reduces the risk. Small-cap stocks are volatile and their performance can highly fluctuate due to any reason hence selection of stocks is the most difficult task for any small-cap mutual fund. Franklin India Smaller Companies Fund is managed by the professional fund managers at Franklin Templeton Mutual Fund. Currently, Mr Hari Shyamsundar and Mr R Janakiraman handle the portfolio who have decades of experience in the asset management business. Under their management, the fund has delivered outstanding returns in the favourable market trends. The trailing returns for the last 7 years are more than 20%.
Conservative Investors Should Skip Small-Caps
Small-cap funds like Franklin India Smaller Companies Fund have the ability to provide highest returns but these funds cannot resist the volatile trends in the equity market. small-cap funds are considered to be highly volatile in the short term. Investment in such schemes should only be done for the long term. Any investment for less than 7 years must be avoided in small-cap funds.
The current market conditions are anticipating better growth in the small and mid-cap category but we know that nothing is certain in the world of equities. However, investing for the long term in Franklin India Smaller Companies Fund can yield high returns to investors. SIP investments can be less risky than lump-sum investment. To know whether you should invest or not or for any other details regarding Franklin India Smaller Companies Fund, connect with the financial experts at MySIPonline.