Newbies in small and mid-cap space should invest for at least five years

With fund managers beginning to sound warning signals, it is best to be extra careful

Recently, ICICI Prudential Asset Management decided to shut down two schemes run by its portfolio management services (PMS) arm. The two schemes are PIPE and Small Cap Portfolio Series 1. Together these funds will return around Rs 7 billion to investors.

According to the asset management company, valuations within the small-cap space have become very expensive. Says Nimesh Shah, managing director and chief executive officer (CEO), ICICI Prudential Asset Management Company: “Small-cap stocks tend to outperform if you invest in them at an early stage when valuations are cheap and earnings growth is at a cyclical bottom. At the current