Ever been on a long road trip with your friends, or even just by yourself for some “me time”? If you haven’t, you must! It’s the most thrilling and exhilarating experience. The charm of a road trip is incomparable. You see many exciting sights, picturesque landscapes and discover various little-known eateries that serve the best chai and snacks.

In the investing journey to wealth creation and goal fulfilment, small-cap funds are like these little moments of hitherto undiscovered treasures you see on your road trip.

The small-cap opportunity on the market highway

Small-cap Funds are equity mutual funds which invest a major portion of your money into small-cap companies i.e. the underdogs that are yet to prove their mettle amid the bigwigs of the market (aka the large caps). Small-cap companies have a smaller market capitalization than the top 250 companies trading in the stock market. They are like the little street-side eateries we mentioned where, if you do take a stop, you will be surprised by the flavour of the food.

Investing in small-cap funds is similar to discovering and exploring the hitherto lesser-known experiences on a road trip. Here’s how:

1. Taking the path less travelled::
   Travellers with a nose for adventure and good navigational skills end up discovering old, forgotten monuments just off the highway or hidden bye-lanes that open out to scenic views. Such places are often hidden in plain sight, but it needs a seasoned traveller to seek them out.
   
   Similarly, fund managers are the experts who can seek out the growth potential of small-cap companies. Even small caps are sometimes hidden in the shadows of large caps, becoming difficult for a new investor to find. However, given their vast experience of investing in the market, fund managers have the ability to sniff out such performers of the future, giving your investments the chance to invest in them right at the beginning (at reasonable rates) and grow with them.

2. Great adventures lead to great experiences:
   Have you ever tried sowing rice on a farm off the highway? Or eating at a little family-run lunch home instead of a highway burger joint? A variety of such little experiences can be very uplifting for any traveller and yield better returns of amazing photos and memories.
   
   Investing in small-cap funds is also like taking the lesser-travelled path compared to investing in large-cap or multi-cap funds. Small-cap funds seem more adventurous as they invest in the up-and-coming companies instead of the known leaders of the market. However, just as you could be pleasantly surprised by your highway detour, small-cap funds can also yield better returns during a favourable phase. Such returns give a leg-up to your portfolio and your journey to wealth creation. But they also come with the risk of high volatility. So it is advisable to study your small cap fund roadmap well before beginning your journey on it.

3. Invested for the long haul::
   journey that matters rather than the destination. It’s kind of the same with small cap funds. They invest in the small cap companies who are on their journey to become the market leaders of the future. This journey could have its fair share of ups and downs in the short term. But the longer you stay invested in them, the more opportunities you get to optimally utilise your investments.

In your road trip of investing, it is important to explore all opportunities, big and small, that you encounter on the market highway. Hence, as you enjoy the star attractions of the large cap funds, also try out the little discoveries small cap funds have to offer.

Aditya Birla Sun Life Small Cap Fund can help you tap the untapped potential of the small cap road and reach your destination of wealth creation. It invests its portfolio predominantly in small cap companies that are in their growth stage to generate long-term capital appreciation. The fund can support your growth portfolio by giving it a chance to earn from the success story of the small cap companies.

Aditya Birla Sun Life AMC Limited /Aditya Birla Sun Life Mutual Fund is not guaranteeing/ offering/ communicating any indicative yield/returns on investments.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.