Top 5 Small Cap Mutual Funds for High Returns
Small-cap mutual funds are equity mutual funds that primarily invest in stocks of small-sized companies with a market capitalization of less than Rs. 5,000 crore. These funds have the potential to deliver high returns over the long term but are also considered to be high risk. If you are an aggressive investor with a long-term investment horizon, then small-cap mutual funds can be a good option to add to your portfolio. In this blog, we will discuss the top 5 small-cap mutual funds that you can consider investing in.
- SBI Small Cap Fund
SBI Small Cap Fund is a top-performing small-cap mutual fund that has consistently outperformed its benchmark over the years. The fund has delivered an average annual return of 24.59% over the last 5 years. It has a portfolio of high-growth small-cap companies with strong fundamentals and a proven track record. The fund is managed by a team of experienced professionals who follow a research-driven investment approach.
- HDFC Small Cap Fund
HDFC Small Cap Fund is another top-performing small-cap mutual fund that has consistently delivered high returns over the long term. The fund has delivered an average annual return of 24.43% over the last 5 years. The fund has a diversified portfolio of small-cap companies from various sectors with strong growth potential. The fund manager follows a bottom-up investment approach and invests in companies with strong fundamentals and growth prospects.
- Axis Small Cap Fund
Axis Small Cap Fund is a relatively new small-cap mutual fund that has been performing exceptionally well since its inception. The fund has delivered an average annual return of 30.64% over the last 3 years. The fund manager follows a research-driven investment approach and invests in high-growth small-cap companies with strong fundamentals and a proven track record. The fund has a well-diversified portfolio of companies from various sectors.
- Nippon India Small Cap Fund
Nippon India Small Cap Fund is a small-cap mutual fund that has consistently outperformed its benchmark over the years. The fund has delivered an average annual return of 21.77% over the last 5 years. The fund manager follows a bottom-up investment approach and invests in small-cap companies with strong growth potential and a sustainable business model. The fund has a well-diversified portfolio of companies from various sectors.
- Kotak Small Cap Fund
Kotak Small Cap Fund is another top-performing small-cap mutual fund that has consistently delivered high returns over the long term. The fund has delivered an average annual return of 23.52% over the last 5 years. The fund manager follows a research-driven investment approach and invests in high-growth small-cap companies with strong fundamentals and a proven track record. The fund has a well-diversified portfolio of companies from various sectors.
Small-cap mutual funds are a category of equity mutual funds that primarily invest in stocks of small-sized companies that have a market capitalization of less than Rs. 5,000 crore. These funds are known for their high return potential but come with a higher degree of risk compared to large-cap or mid-cap mutual funds. Small-cap companies are typically early-stage businesses that have a high potential for growth but are also more vulnerable to economic shocks and market volatility.
Investing in small-cap mutual funds requires a long-term perspective, as these funds can be more volatile and may require a longer holding period to reap the benefits of the growth potential of the underlying companies. However, the potential rewards of investing in small-cap mutual funds are also higher, with the potential for higher returns over the long term.
When selecting a small-cap mutual fund, it’s essential to consider factors like the fund manager’s experience, investment philosophy, and past performance. Additionally, diversification is crucial, as small-cap companies are more susceptible to market volatility and sector-specific risks. A well-diversified portfolio of small-cap stocks can help mitigate these risks.
The five small-cap mutual funds listed above have been top performers in the category and have a track record of delivering strong returns over the long term. However, investors should remember that past performance is not a guarantee of future results, and investing in mutual funds always carries a degree of risk. It’s essential to conduct thorough research and seek professional advice before investing in any mutual fund.
Conclusion
Small-cap mutual funds can be a good investment option for aggressive investors with a long-term investment horizon. These funds have the potential to deliver high returns over the long term but are also considered to be high risk. The above-mentioned funds are some of the top-performing small-cap mutual funds that you can consider investing in. However, before investing in any mutual fund, make sure to do your own research and consult with a financial advisor.
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Frequently Asked Questions (FAQs)
What is a mutual fund?
A mutual fund is a type of investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other assets.
What are the different types of mutual funds?
The different types of mutual funds include equity funds, debt funds, hybrid funds, sectoral funds, index funds, and tax-saving funds.
What are the benefits of investing in mutual funds?
The benefits of investing in mutual funds include diversification, professional management, liquidity, and ease of investing.
What are the risks of investing in mutual funds?
The risks of investing in mutual funds include market risk, interest rate risk, credit risk, inflation risk, and liquidity risk.
How do I invest in mutual funds?
Investors can invest in mutual funds through a broker, financial advisor, or online investment platform.
What is the minimum investment amount for mutual funds?
The minimum investment amount for mutual funds varies by fund and can range from as low as Rs. 100 to Rs. 5,000 or more.
How are mutual fund returns calculated?
Mutual fund returns are calculated based on the change in the net asset value (NAV) of the fund, which reflects the performance of the underlying assets.
What is a systematic investment plan (SIP)?
A systematic investment plan (SIP) is a method of investing in mutual funds in which investors make regular, periodic investments at fixed intervals, typically monthly.
Can I redeem my mutual fund investment anytime?
Yes, mutual fund investments can be redeemed anytime. However, redemption may be subject to exit loads or other charges depending on the fund’s terms and conditions.
How do I choose the right mutual fund for my investment goals?
Investors should consider factors like investment objectives, risk tolerance, investment horizon, and past performance when selecting mutual funds. Seeking professional advice from a financial advisor can also be helpful in making informed investment decisions.
