The marked scale-back in small caps valuations as a result of the market turmoil could prompt investors to search for value in the minnow end of the market. But market watchers warn that using a valuation measure such as a stock's discount to its net asset value can be misleading when searching for good stock picks.

This is because the discount to asset value is occasionally justified due to risk factors like the quality of assets and management credibility. One sector that often trades under asset value is listed investment companies (LIC), which primarily invest in securities on behalf of their unit holders.