Invest in Best Small Cap Funds in India 2024
Discover the best performing Small Cap Funds in India. Learn the risks, key benefits, and who should invest along with expert insights
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What are Small Cap Funds?
Small Cap Funds are equity mutual funds that invest primarily in small sized companies, typically those ranked beyond 250 terms of market capitalization. A minute portion of your investment goes into higher market categories.
Who Should Invest in Small Cap Funds?
- Risk tolerant Investors: Investors who have high risk tolerance can consider investing in this fund
- Long-Term Investors: Investors with a longer investment horizon typically between 7-10 years, giving ample time for the company to grow can invest in these funds
- Diversified Portfolio Seekers: Investors aiming to diversify their equity portfolio with exposure to high-growth potential stocks can consider investing in this
- Experienced Investors: Individuals who have thorough market knowledge and can withstand volatility can invest in this fund
- Young Investors: Younger investors with a longer investment horizon that are capable for higher risk taking can choose to invest in small cap fund
Best Performing Small Cap Funds
| Fund name | Category | Risk | 6 months return | 1 year returns | Rating | Fund Size in crores |
| Bandhan Small cap fund | Small Cap | Very High | 26.88% | 73.10% | 5 | 5880 |
| Quant Small Cap Fund | Small Cap | Very High | 23.50% | 65.62% | 5 | 22967 |
| Nippon India Small Cap Fund | Small Cap | Very High | 25.12% | 56.76% | 4 | 56468 |
| HDFC Small Cap | Small Cap | Very High | 16.24% | 41.44% | 4 | 31522 |
| ITI Small Cap Fund | Small Cap | Very High | 26.57% | 67.56% | 4 | 2234 |
Factors to Consider While Investing in Small Cap Funds
- Historical Performance: Analyze the fund’s past performance to understand the return patterns
- Expense Ratio: Consider the expense ratio, as lower costs can lead to better returns
- Risk Factor: Small Cap funds are highly volatile compared to large or mid cap funds. The net asset of these companies fluctuate rapidly, so if you have high risk tolerance you can choose to invest in this
- Investment expertise: Small cap funds are known to give better returns compared to other funds. So, people with sufficient knowledge about the workings of mutual funds and ability to predict the market conditions, can consider investing in this fund
- Longer Duration: These funds typically take a longer time horizon to provide better returns.
Major Benefits of Small Cap Funds
- High Growth Potential: Small cap companies have huge growth potential, offering the chance for high returns.
- Diversification: Since a part of your fund goes into large companies, you can be assured that you are taking a calculated risk
- Market Inefficiencies: Less researched stocks allow skilled fund managers to capitalize on market inefficiencies.
- Long-Term Wealth Creation: Ideal for long-term investors looking to build a fortune over a longer time period
Risks Involved in Small Cap Funds
- Market Risk: They are more likely to be impacted by market volatility and economic downturns
- Liquidity Risk: Small-cap stocks may have lower liquidity, leading to difficulties in buying or selling shares quickly. You may not find buyers during economic crisis
- Higher Volatility: Their prices fluctuate dramatically. In such a case, the losses might be substantial since the stocks might not meet your expected price
- Business Risk: Small cap businesses often have more challenges and would have tough time tackling economic slowdowns compared to large and mid-cap companies
- Performance Dependence: Your fund manager must be skilled enough to invest in companies that have potential to grow
Frequently Asked Questions (FAQs) about Small Cap Funds
What are Small Cap Funds?
Small Cap Funds are equity mutual funds that invest in companies with small market capitalizations, typically ranked above 250
Who should invest in Small Cap Funds?
It is suited for experienced investors, individuals with high risk tolerance, and those seeking diversified portfolio
What are the benefits of investing in Small Cap Funds?
Small cap funds often huge growth potential and better returns compared to large and mid cap funds
What are the risks associated with Small Cap Funds?
Risks include market risk, liquidity risk, higher volatility, business risk, and dependence on the fund manager’s stock-picking ability.
How do I choose the right Small Cap Fund?
Factor in historical returns, expense ratio, and fund manager’s expertise, your investment goal, risk appetite. You can also contact Fincover.com through our social media posts or email us at support@fincover.com and we have in-house MF experts who can guide you to poick the best small cap fund tailored to your goals
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- Canara Robeco Mutual Fund
- PPFAS Mutual Fund
- Nippon India Mutual Fund
- HSBC Mutual Fund
- SBI Mutual Fund
- Edelweiss Mutual Fund
- PGIM India Mutual Fund
- LIC Mutual Fund
- Bandhan Mutual Fund
- Quantum Mutual Fund
- HDFC Mutual Fund
- Axis Mutual Fund
- ITI Mutual Fund
- Kotak Mutual Fund
- ICICI Prudential MF
- Aditya Birla Sunlife MF
- DSP Mutual Funds
- Mirae Asset Mutual Fund
- Motilal Oswal Mutual Fund
- Sundaram Mutual Fund
- Invesco Mutual Fund
- Taurus Mutual Fund
- Whiteoak Capital MF
- Quant Mutual Fund
- JM Financial MF
- UTI Mutual Fund
- Baroda BNP Paribas MF
- Franklin Templeton MF
- Union Mutual Fund
