Does a buy and hold strategy work in small cap funds?

It works, and it works very well. In fact, this works better than if you put money in large caps 😄.

Wipro was a small cap in 1980. Had you bought only a small amount, you would have crores of rupees today.

Very recently, Trident Ltd was a small cap when it was Rs.4. Currently it is Rs.24 and has a market cap of Rs.16,000 Crores and is now a mid cap. I expect this to move to the large cap in a few years, if not earlier.

On the other hand, look at Infosys, a large cap, since the past 5 years.

Image Source: Google

It barely grew from Sept 2018 to March 2020. This is the drawback of a large cap, because the growth does not happen a lot and ultimately the stock suffers.

-Mudit ‘Moody’ Agarwal.