The top 100 listed companies are categorised as large caps. The next 150 companies are declared as mid caps. And all other companies fall under the small cap category.
I read an article that large caps cannot offer superior returns, since they have little scope to expand. Mid caps have to compete with large caps and might not have a lot of opportunities left to make money. So, smallcaps are the place to be since
- they provide solutions to a variety of problems(they are diversified) and might not have direct competitors from the large & mid cap space.
- they have captured only a small customer base, say 0.1% of 1.428 billion is 1.4 million and a larger customer base could lead to exponential increase in profits which drives the stock prices higher and might pay out higher dividends
- there are several small caps that has growth potential, comparatively higher than large & mid caps
So, include multiple small cap MF with different strategies in the portfolio to diversify and have a piece of the pie, what do you think ?