Can small-cap funds really deliver higher long-term returns?

Key points

• Small-cap funds have long enjoyed a special place among investors.
• The logic seems straightforward: invest in smaller companies today and benefit from their growth tomorrow.
• But is the promise of higher returns always worth the extra risk?
• A new report from Share.Market by PhonePe suggests investors may want to have a closer look before assuming that small-cap funds are the best route to long-term wealth creation.
• While small caps have delivered better returns than large caps over the past two decades, the difference may be smaller than many investors expect.