Introduction of Top 5 small cap Mutual Funds
Small cap mutual funds have gained popularity among investors who are looking for high returns on their investments. These funds invest in small-cap companies with a market capitalization of less than Rs. 5,000 crore, which have the potential to grow at a faster rate than their larger counterparts. In this blog, we will take a look at the top 5 small cap mutual funds to invest in 2021.
- Axis Small Cap Fund – This fund has consistently outperformed its benchmark and peers over the long term. It invests in high-growth small-cap companies with a strong business model and competitive advantage. The fund has delivered an average return of 26% over the last five years and is a good choice for investors looking for high returns over the long term.
- SBI Small Cap Fund – This fund has a diversified portfolio of small-cap stocks across different sectors. It follows a bottom-up approach and invests in companies with a strong management team, good corporate governance, and growth potential. The fund has delivered an average return of 23% over the last five years and is a good choice for investors who want to invest in small-cap stocks but are looking for a diversified portfolio.
- Nippon India Small Cap Fund – This fund has a track record of consistently delivering high returns over the long term. It invests in small-cap companies that have the potential to become large-cap companies in the future. The fund has delivered an average return of 24% over the last five years and is a good choice for investors who are looking for high returns with a moderate risk appetite.
- HDFC Small Cap Fund – This fund has a well-diversified portfolio of small-cap stocks across different sectors. It follows a disciplined investment process and invests in companies with a strong management team, good corporate governance, and growth potential. The fund has delivered an average return of 24% over the last five years and is a good choice for investors who want to invest in small-cap stocks but are looking for a disciplined approach.
- Kotak Small Cap Fund – This fund has a focused portfolio of high-growth small-cap companies. It invests in companies with a strong business model, competitive advantage, and growth potential. The fund has delivered an average return of 22% over the last five years and is a good choice for investors who want to invest in a focused portfolio of small-cap stocks.
In conclusion
small cap mutual funds can be a good investment option for investors who are willing to take on higher risks for potentially higher returns. However, it is important to choose the right fund that matches your risk appetite and investment goals. The above-mentioned funds have a track record of consistently delivering high returns over the long term and can be considered for investment in 2021.
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Frequently Asked Questions (FAQs)
Q: What are small cap mutual funds?
A: Small cap mutual funds invest in small-cap companies with a market capitalization of less than Rs. 5,000 crore. These companies are often in the early stages of growth and have the potential to grow at a faster rate than larger companies.
Q: Why should I invest in small cap mutual funds?
A: Small cap mutual funds can offer high returns over the long term. As small-cap companies grow and become more established, their stock prices can increase significantly, leading to potentially higher returns for investors.
Q: What are the risks associated with investing in small cap mutual funds?
A: Small cap mutual funds are generally considered riskier than large-cap mutual funds due to the volatility of small-cap stocks. Small-cap companies may also have less established business models and financial records, which can increase the risk of investing in these companies.
Q: What should I look for when selecting a small cap mutual fund to invest in?
A: When selecting a small cap mutual fund, you should consider the fund’s track record, investment strategy, fees, and the experience and expertise of the fund manager.
Q: Are there any tax implications associated with investing in small cap mutual funds?
A: Yes, like any other mutual fund, small cap mutual funds are subject to capital gains tax when sold. The tax rate will depend on the holding period and the type of fund.
Q: How much should I invest in small cap mutual funds?
A: The amount you should invest in small cap mutual funds will depend on your investment goals, risk appetite, and financial situation. It is recommended to consult with a financial advisor before making any investment decisions.
Q: Can I invest in multiple small cap mutual funds?
A: Yes, you can invest in multiple small cap mutual funds to diversify your portfolio and reduce risk. However, it is important to ensure that the funds you select have different investment strategies and holdings to avoid overlap.
