Recent stress tests indicate that there is greater risk in smallcap funds, especially in funds with a low liquidity profile. In this context, our lead editorial notes that the stress tests are an indication for both the fund houses and the investors. Fund houses may contemplate inflows only to an extent that is manageable. For investors, it once again underlines higher risk in small caps. Even while investing through mutual funds, investors must aim for a diversified holding. Read here
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