Ch.6 · Distributor Commission Structure · medium
What is the recommended minimum investment horizon for a small cap equity fund?
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EXPLANATION
Small cap funds invest in companies ranked 251st and below by market cap — these are highly volatile and can fall 50–70% in bear markets. A minimum horizon of 7+ years is typically recommended to allow sufficient time to recover from downturns and benefit from the long-term growth potential of small cap companies.
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