Why it's best to stick to quality businesses and be prepared to wait it out
Smaller companies are more susceptible to macroeconomic swings
To get answers to this, Forbes India turned to DSP BlackRock, which has been running a successful Microcap Fund since 2007—long before the category was the flavour-of-the-season investment it is today. Its performance is nothing to be scoffed at: The fund has delivered a five-year compound annual growth rate of 33.5 percent and has seen periods of severe undervaluation (during the 2013 Fed taper tantrum) and overvaluation (now). The reason for its performance is that the fund identified a lot of companies early on and then stuck to them as earnings came through. As a result, it was able to take full advantage of the gains as they accrued. Investors who’ve entered the mid-cap party late would do well to remember that a large part of the gains in this category have probably been front-ended.(This story appears in the 30 March, 2018 issue of Forbes India. To visit our Archives, click here.)