Small-Cap Funds: Opportunity or Danger? Experts Weigh In on Current Market Reset

• Small-cap stocks have undergone a significant reset, with nearly half trading 40% below all-time highs, indicating a valuation compression phase.
• Experts suggest this period of 'time and price correction' offers a rational window for gradual exposure building, rather than aggressive positioning.
• Small caps offer higher long-term growth potential (Nifty Smallcap 250 SIPs returned 17% CAGR since 2016) but come with sharper volatility.
• Industry experts recommend a gradual, disciplined SIP-based approach for long-horizon investors comfortable with drawdowns, emphasizing small caps as a 'side dish' in a diversified portfolio.
• Key considerations for increasing small-cap allocation include a 7-10 year investment horizon, comfort with interim drawdowns, and clear rebalancing discipline.