New Delhi, July 6 -- Small-cap funds can reward investors with strong long-term growth, but they are not for the faint-hearted. Frequent volatility, deeper drawdowns, and liquidity risks mean investors should enter gradually and stay invested through market cycles. Here's a look at what strategy you should follow when investing in small-cap funds? Also, how much should they be part of your portfolio?

"Small-cap schemes can play a constructive role as a growth sleeve within an equity portfolio, but they are highly volatile. There can be high-drawdowns and therefore require a longer time horizon and careful sizing rather than blanket allocation advice," asserts Arijit Sen, SEBI Registered Investment Adviser, Co-Founder, Merry Mind.

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