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SBI Small and Mid Cap Fund: Fund Review

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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 1438 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 maximum SIP investment the fund allows is Rs 25,000. 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 fund outperformed its benchmark 5 out of 7 years since inception in September 2009. A Rs 5,000 SIP stated in this fund 5 years ago is worth Rs 4.70 lakhs now.

 

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

 

The fund has beaten the benchmark 5 out of 7 years since its launch. Within the category, the fund stands second. The fund has beaten the benchmark and category by 6  and 4-7 percentage points respectively in the 3 and 5-year returns. Among its peers, the fund has given better and consistent returns. It is also ranked second in the category of small-cap funds.

 

Fund1 Year Return (%)3 Year Return (%)5 Year Return (%)
SBI Small Cap Fund-Regular (G)-22.74%14.82%28.95%
Reliance Small Cap Fund(G)-20.16%13.80%26.49%
HDFC Small Cap Fund-Regular (G)-10.93%17.78%20.33%
L&T Emerging Businesses Fund-Regular (G)-17.06%17.02%N/A
Franklin India Smaller Cos Fund(G)-18.15%10.31%22.35%

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 60-70% in small cap. The top five holding sectors constitute 69% of the portfolio. These include FMCG (20.28%), financial (18.19%), engineering (14.74%), construction (8.12%) and consumer durables (7.22%).

 

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 the best results.

 

Fund NameSBI Small Cap Fund
Original Fund NameSBI Small and Mid Cap Fund
Launch DateSeptember 9th, 2009
AUMRs 1438 Cr
Return (Returns greater than 1 year are annualized)Since Launch: 18.09%
1 Year: -22.74%
3 Year: 14.82%
5 year: 28.95%
Expense Ratio2.44%
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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