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SBI Small and Mid Cap Fund: Fund Review

SBI Small Cap Fund is a fund in the small-cap category. Initially, it was called SBI Small and Mid Cap Fund. Following the introduction of new rules by the Securities and Exchange Board of India (SEBI) for rationalization of mutual fund schemes, the fund will now fall in the small-cap category. With assets of Rs 836 cr, managed by R.Srinivasan, the fund is one of the best performing funds in the category.

Fund to reopen subscriptions

The fund has reopened subscriptions through SIP more from May 16th, 2018. The fund hasn’t taken any fresh investments since October 2015. Mainly because the fund could only invest in companies beyond 401st stock in terms of market capitalization. Now with the new SEBI rules, the fund can invest in stocks beyond 251st in terms of market capitalization.

Performance

The BSE Small Cap Index category in 2017 witnessed a 50% growth. The best performing fund in the category was the SBI Small and Mid Cap Fund which gave whooping 80% returns between January and December.

 

 

The fund being completely devoted to equity it is natural that one compared it to the Sensex and Small Cap Index. Even with a slight market correction in Feb 2016, the SBI Small Cap Fund remained to perform better than the BSE Small Cap Index and BSE Sensex.

 

 

During the 3 year period, starting July 2015, the annualized returns of SBI Small Cap Fund is 23.45%, BSE Small Cap Index is 15.82% and BSE Sensex is 7.96%. The fund has outperformed the BSE Sensex and Smallcap Index even during the market correction in February 2016.

The fund has beaten the benchmark 5 out of 7 years since its launch. Fund has earned a five-star rating after its performance last year. Within the category, the fund stands first. The fund has beaten the benchmark and category by 12-20 percentage points in the 1 and 3-year returns. Among its peers, the fund has given better and consistent returns. It is also ranked first in the category of small-cap funds.

 

Fund1 Year Return (%)3 Year Return (%)5 Year Return (%)
SBI Small Cap Fund-Regular (G)32.0%23.4%34.5%
Reliance Small Cap Fund(G)19.3%22.7%35.3%
HDFC Small Cap Fund-Regular (G)24.9%21.3%23.4%
L&T Emerging Businesses Fund-Regular (G)18.2%24.8%N/A
Sundaram Small Cap Fund(G)6.3%13.5%26.9%

Fund Information

This high-risk fund is an emerging star in the category. It looks for five attributes in the stocks it buys. They are, competitive advantage, return on capital, growth, management, and valuation. The scheme seeks to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well-diversified basket of equity stocks of small-cap companies.

The fund invests 65-75% in small cap. The top five holding sectors constitute 87% of the portfolio. These include industrials (32%), consumer cyclical (24.6%), basic material (12.2%), consumer defensive (11.4%), and healthcare (6.9%).

Recommendation

It is recommended to invest in this fund through SIP. This fund is ideal for long-term goals like retirement, kids’ education, the seed fund for own startup. Don’t look at returns of these funds in the short-term.

Smart Tip: This fund has higher ups and downs (volatility) than other equity funds but can yield much better returns. Invest in this fund for an investment horizon of at least 5 years to give best results.

 

Fund NameSBI Small Cap Fund
Original Fund NameSBI Small and Mid Cap Fund
Launch DateSeptember 9th, 2009
AUMRs 836 Cr
Return (Returns greater than 1 year are annualized)Since Launch: 22.29%
1 Year: 32.07%
3 Year: 23.45%
5 year: 34.53%
Expense Ratio2.32%
Fund Category RiskHigh
Investment PlanGrowth
Minimum Investment Horizon5+ years
Minimum InvestmentRs 5,000
Minimum Additional InvestmentRs 1,000
Exit Load1% if withdrawn within 1 year
Fund ManagerR. Srinivasan

 

Ride the market like a Pro, Invest in Upwardly Small and Mid Cap Portfolio investment plan. Happy Investing!

You can read this article in Hindi here.

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