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Small-cap funds are now big wealth creators. And these are the sectors they are betting on.

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Synopsis
Long-term bets on small companies in sectors like infrastructure and manufacturing have turned the tide for small-cap funds, which have seen record inflows of late. While some of these stocks have given high returns, they are also volatile, illiquid, and expensive. Experts say one should get into them keeping a long-term investing horizon in mind.

The returns of small-cap funds have been topping the charts. Over the last one year, they have given 28% returns, compared with 18% for large-caps and 22% for mid-caps. According to data from Morningstar India, even on a three-year performance, they stand out with stellar gains of 39% annually. Against this, large-cap funds have returned 21%. This is because, at the macro level, the market return has tilted in favour of the manufacturing