Small cap investing is most favoured in India.
Let's deep dive.
RETWEET for maximum reach.
Over the last five years, small-cap funds have delivered an exhilarating rideโannualized returns often soared in the 25โ30% zone, luring in both seasoned investors and new enthusiasts.
Much of this was thanks to post-pandemic recoveries,policy tailwinds and an earnings rebound off a very low base.
But markets evolve.
As Indiaโs profit-to-GDP ratio normalizes and the sector matures,the days of such blockbuster small-cap returns are fading.
Going forward,realistic return expectations from small-cap funds should hover in the 12โ14% CAGR rangeโstill above inflation, still a great compounding engine, but no longer the Wild West of 2020โ2024.
Why this moderation?
Earnings growth for the broader economy is projected closer to 11โ13% annually;market returns follow this anchor over time.
The recipe for success in small caps isnโt sprinting, but patient, steady compoundingโsticking with well-researched businesses, sector leaders, and innovation.
My advice: recalibrate your expectations,diversify smartly, and let compounding do its magic.
The next decade could still be Indiaโs, but sober optimism is the most powerful trade you can make.
Thank you for your time ๐๐.