Best Small Cap Mutual Funds to invest for 2019 – 2020

 

Upwardly presents to you the best small cap mutual funds for 2019 – 2020

 

RankFund NameReturns (5YRS)Growth of ₹ 1lakh in 5 years*Invest
1SBI Small Cap Fund28.39%₹3.49 LakhsInvest
2Reliance Small Cap Fund26.12%₹3.19 LakhsInvest
3HDFC Small Cap Fund19.91%₹2.48 LakhsInvest
4Franklin India Smaller Companies21.25%₹2.62 LakhsInvest
5DSP Small Cap Fund23.57%₹2.88 LakhsInvest
*Comparing returns for ₹ 1,00,000 invested 5 years back

 

1. SBI Small Cap Fund

SBI Small Cap Fund is one of the best small cap mutual fund. 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 has reopened subscriptions through SIP more from May 16th, 2018. The fund hasn’t taken any fresh investments since October 2015. Over three years and five years, the fund has been ahead of its benchmark by 5-10 percentage points. Compared to the category, it has managed 1-2 percentage point outperformance. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.65 lakhs now.

 

2. Reliance Small Cap Fund

This is one of the rare funds in the equity space which has beaten the benchmark as well as the category across all the time frames: one year, three years, five years or even seven years. It is one of the best small cap fund. Managing solid performance, even in bear phases, without leaning on large-caps is credible. Over three and five years, the fund has been ahead of its benchmark by 5 to 9 percentage points. Compared to the category, it has managed 3 to 5 percentage point outperformance. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.35 lakhs now.

 

3. HDFC Small Cap Fund

The fund aims at providing long-term capital appreciation, by investing at least 65% in small-cap companies and targets high-quality small-cap business which is undervalued and have a sustainable business. Over three and five years, the fund has been ahead of its benchmark by 8 to 4 percentage points. Compared to the category, it has managed 7 to 1 percentage point outperformance. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹4.50 lakhs now.

 

4. Franklin India Smaller Companies Fund

This fund has outperformed its benchmark without a break for the last nine years. In terms of investing style, it manages a balance between businesses with an acceptable level of quality, growth, and sustainability. Over three and five years, the fund has been ahead of its benchmark by 1 to 4 percentage points. Compared to the category, it has managed 2 percentage point outperformance. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹3.92 lakhs now.

 

5. DSP Small Cap Fund

DSPBR Small Cap Fund follows a bottom-up approach to picking stocks. The fund managers buy and hold the stocks that they believe are growth-oriented and have a competitive edge over their peers. They strongly believe in valuation and are unwilling to compromise on quick gains. While they believe in long-term gains they are unaffected by the short-term volatility in the small-cap world. Over five years, the fund has been ahead of its benchmark by 5 percentage points. Compared to the category, it has managed 4 percentage point outperformance. A SIP of ₹5,000 p.m. in this fund started 5 years ago is worth ₹3.87 lakhs now.

 

Small Cap Mutual Funds

The category has been through a severe beating over the last year. However, the returns from this category have proven to be very high in the past. The category also attracted a lot of investor interest and money. Small-cap and mid-cap funds are such funds which are though volatile but have high growth possibilities. We discuss the advantages of small-cap funds.

Advantages of Small Cap Mutual Funds

1. High Growth Potential

These funds have high growth possibilities because of their low market capitalization. For example, it is easier for a company of the size of Rs. 10 crores to double its size than for a company with a size of Rs. 1000 crore. These firms enter the market with new product offerings which allow them to grow rapidly, thus boosting your returns.

2. Benefit from Undervaluation

Small and micro-cap companies generally have low equity research coverage. The market cap of these firms can be lower than their intrinsic value. You will pocket returns when the market price converges towards the true value.

3. Focused Business Models

Small and micro-cap companies operate with extremely focused business models on account of small size. These companies being new entrants are focused and operate extremely efficiently. This focus helps them to grow rapidly and this expansion helps their investors in the fast growth of their investments.

 

Invest in the best small cap mutual funds on www.Upwardly.in. 

Happy Investing!!

 

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