Aditya Khemani, a key figure at Invesco Mutual Fund, believes that smallcap funds, while appearing optically expensive, offer significant long-term investment potential due to structural improvements in fundamentals and governance. He notes that the Indian equity market has experienced a consolidation phase following strong returns from 2020 to 2024, with recent geopolitical events, such as the Iran war, influencing short-term earnings expectations. Despite these challenges, Khemani emphasizes that a substantial portion of negative factors is already priced in, presenting a buying opportunity for long-term investors. He suggests that sectors like financials, healthcare, and consumer discretionary will drive the next earnings cycle, with smallcap funds historically delivering a compound annual growth rate (CAGR) of around 15.5% over the past decade. Khemani advises investors to maintain a minimum investment horizon of five to seven years to fully capitalize on the potential growth in the smallcap segment.