In general, stocks are divided into large-cap, mid-cap and small-cap, they are categorized depending on the current market capitalization. Market capitalization is basically described when the company is having a total number of outstanding shares in the market which is multiplied by the current price per share. In this article, we will peer out the five Myths, about mid-cap and small-cap funds.
5 Myths which you must know about Mid Cap and Small Cap Funds
Mid Cap stocks are medium-sized companies which are having small market share, revenues and profits compared to large-cap funds. Whereas Small Cap companies are the one those who have not achieved any scale in the market yet. There are several myths available, need to be cleared out before we proceed further in investment.
Mid Cap and Small Caps are Risky
Equity is much risky in different market cap segments, and each and every having different risk profiles. If you are thinking that Mid Cap and Small Caps are large-cap as because they have the advantage of market presence in large balance sheet then you are wrong. Although not each and every mid-cap and small-cap are similar, there are several strong companies available in the stock market which can be selected for investment.
Mid Cap and Small Caps are of Inferior Quality
Large-cap companies are thought of more reliable as because they are having, high revenue and profit. All the only thing that matters is the capital appreciation other than a good headline for newspaper with high revenue and profit.
High Dividend Yield Stocks and Funds are Better
Each and every country serving different appreciation of dividend yield. So, if you thinking about going in the fact of high dividend yield read from the Western journal then you are wrong. Reinvest in profit in the growth opportunities rather than paint dividend which will be much beneficial for shareholders in the company.
Go for buying multi-bagger midcap stocks directly from the stock market
Most of the Mid Cap and Small Caps turn out to be multi-baggers, but even the investors are really interested in those stocks at the right price. So, you should definitely get the complete information about them before investing on the basis of rumours. For example, there were several flying mid Cap stocks in the year 2007 is now below peak levels and has destroyed huge amount of investors’ money.
Mid Cap and Small Caps are good in a bull market and bad in bear market
It is recorded that Mid Cap and Small Caps perform in an outstanding manner in the Bull market, whereas they perform under bear markets. So, before you proceed with the investment you need to consider this factor before you invest in the stock markets based on this myth.
Before you get to invest in mutual fund schemes, you need to have the Complete information about various aspects of the market. We have gathered various information about myths which are misunderstood by investors, in order to clear such misunderstanding, we have provided the complete guideline in this article. Share this useful article with others, so that they get to clear out the doubts about mid-cap and small-cap funds.