New Delhi, Sept. 7 -- Small cap stocks used to fall by around 40-45% during corrections in the pre-covid period. However, post-covid, the average decline has been closer to 25%, said Samir Vartak, founder and chief investment officer of SageOne Investment Managers.

Simultaneously, earnings growth has accelerated, Vartak told Mint in an interview. While small-cap earnings growth largely mirrored that of large caps prior to covid, though with greater volatility, it now outpaces large-cap earnings growth by at least 5 to 8 percentage points.

Here are some edited excerpts from the interview.

Small caps tend to be very cyclical. In the past, they went through a 3-4 year cycle, followed by 9-18 months of correction. The peak was around Septe...