Mutual funds eye micro stars as broader equity market gathers pace

Outperformance lures fund houses to explore micro-cap schemes; challenging space, say experts

At a time when investors are preferring higher-risk investment products like thematic and small-cap mutual fund (MF) schemes, some fund houses are exploring the possibility of going further down the market-capitalisation (m-cap) ladder to unearth newer investment opportunities.

HDFC MF had filed papers with the capital markets regulator — the Securities and Exchange Board of India (Sebi) — earlier this year for an active micro-cap scheme. Some more fund houses are keen on launching such schemes, say industry observers.

In general, a stock is considered to be a micro-cap if it is ranked below 500 in terms of full m-cap