Best Small Cap Mutual Funds to Invest in 2022
Investing in mutual funds is an excellent way to grow your wealth and achieve long-term financial goals. Small cap mutual funds, in particular, are a great option for investors who are willing to take on higher risks in pursuit of potentially higher returns. In this blog, we will discuss some of the best small cap mutual funds to invest in 2022.
What are Small Cap Mutual Funds?
Small cap mutual funds are those that invest primarily in stocks of small-cap companies, which have a market capitalization of less than Rs. 5000 crore. Small cap companies are relatively new in the market and have a higher potential for growth compared to larger and more established companies. Small cap mutual funds carry higher risk, but they also have the potential for higher returns in the long run.
Best Small Cap Mutual Funds to Invest in 2022
Axis Small Cap Fund
Axis Small Cap Fund is a top-performing small-cap mutual fund with a track record of delivering high returns to its investors. The fund has a diversified portfolio of small-cap stocks, with a focus on quality and growth-oriented companies. The fund has delivered an annualized return of 31% over the past five years.
HDFC Small Cap Fund
HDFC Small Cap Fund is another top-performing small-cap mutual fund that has consistently delivered high returns to its investors. The fund has a well-diversified portfolio of small-cap stocks, with a focus on quality and growth-oriented companies. The fund has delivered an annualized return of 30% over the past five years.
SBI Small Cap Fund
SBI Small Cap Fund is a high-risk, high-reward small-cap mutual fund that invests primarily in small-cap stocks of emerging companies. The fund has a well-diversified portfolio of small-cap stocks, with a focus on quality and growth-oriented companies. The fund has delivered an annualized return of 28% over the past five years.
Kotak Small Cap Fund
Kotak Small Cap Fund is a top-performing small-cap mutual fund with a focus on investing in quality and growth-oriented companies. The fund has a diversified portfolio of small-cap stocks, with a bias towards mid-cap stocks. The fund has delivered an annualized return of 32% over the past five years.
Nippon India Small Cap Fund
Nippon India Small Cap Fund is a high-risk, high-reward small-cap mutual fund that invests primarily in small-cap stocks of emerging companies. The fund has a well-diversified portfolio of small-cap stocks, with a focus on quality and growth-oriented companies. The fund has delivered an annualized return of 27% over the past five years.
Small-cap mutual funds can be an excellent addition to a well-diversified investment portfolio, especially for those who are willing to take on higher risks for the potential of higher returns. It’s essential to keep in mind that small-cap stocks can be more volatile and carry higher risks compared to larger-cap stocks. However, investing in quality small-cap companies can also provide significant returns over the long run.
Here are a few more small-cap mutual funds that you may want to consider:
Franklin India Smaller Companies Fund
Franklin India Smaller Companies Fund is a well-diversified small-cap mutual fund that invests in companies with strong growth potential. The fund’s portfolio is well-diversified across various sectors, with a focus on quality companies. The fund has delivered an annualized return of 29% over the past five years.
DSP Small Cap Fund
DSP Small Cap Fund is a high-risk, high-reward small-cap mutual fund that invests in quality and growth-oriented small-cap companies. The fund has a well-diversified portfolio of small-cap stocks across various sectors. The fund has delivered an annualized return of 33% over the past five years.
Aditya Birla Sun Life Small Cap Fund
Aditya Birla Sun Life Small Cap Fund is a well-diversified small-cap mutual fund that invests in quality and growth-oriented small-cap companies. The fund’s portfolio is well-diversified across various sectors, with a focus on companies with strong growth potential. The fund has delivered an annualized return of 28% over the past five years.
IDFC Sterling Value Fund
IDFC Sterling Value Fund is a small-cap mutual fund that invests in undervalued small-cap companies with strong growth potential. The fund’s portfolio is well-diversified across various sectors, with a focus on companies with sound fundamentals. The fund has delivered an annualized return of 28% over the past five years.
Canara Robeco Small Cap Fund
Canara Robeco Small Cap Fund is a well-diversified small-cap mutual fund that invests in quality and growth-oriented small-cap companies. The fund’s portfolio is well-diversified across various sectors, with a focus on companies with strong growth potential. The fund has delivered an annualized return of 31% over the past five years.
Conclusion
In conclusion, small-cap mutual funds can be an excellent way to diversify your investment portfolio and potentially earn higher returns over the long run. However, investing in small-cap mutual funds involves higher risks and requires careful consideration and research. Investors should always consult with a financial advisor and do their due diligence before investing in any mutual fund.
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Frequently Asked Questions (FAQs)
What are small-cap mutual funds?
Small-cap mutual funds are investment funds that primarily invest in the stocks of small-cap companies. These companies have a smaller market capitalization, typically between $300 million and $2 billion.
What is the difference between small-cap and large-cap mutual funds?
Small-cap mutual funds invest in small-cap companies, while large-cap mutual funds invest in large-cap companies. Small-cap stocks tend to be riskier and more volatile than large-cap stocks but can also offer higher returns over the long run.
Are small-cap mutual funds suitable for every investor?
Small-cap mutual funds can be suitable for investors with a high risk tolerance who are willing to take on higher risks for the potential of higher returns. However, they may not be suitable for conservative investors or those with a low risk tolerance.
What are the benefits of investing in small-cap mutual funds?
Investing in small-cap mutual funds can offer higher returns over the long run, as small-cap companies often have significant growth potential. Additionally, small-cap mutual funds can provide diversification benefits and may perform well during certain economic conditions.
What are the risks of investing in small-cap mutual funds?
Small-cap mutual funds can be more volatile and carry higher risks compared to larger-cap mutual funds. Additionally, small-cap companies may have less liquidity, which can make it challenging to sell their stocks during market downturns.
How do I choose the right small-cap mutual fund?
Investors should consider various factors, such as the fund’s investment strategy, fees, historical performance, and portfolio composition when choosing a small-cap mutual fund. Consulting with a financial advisor can also be helpful.
Can small-cap mutual funds provide dividend income?
Some small-cap mutual funds may provide dividend income, but this is not common as small-cap companies tend to reinvest their earnings into growth opportunities.
Can I invest in small-cap mutual funds through a tax-advantaged account?
Yes, investors can invest in small-cap mutual funds through tax-advantaged accounts such as IRAs, 401(k)s, and 529 plans.
What is the minimum investment required to invest in small-cap mutual funds?
The minimum investment required to invest in small-cap mutual funds varies by fund, but it can range from a few hundred dollars to several thousand dollars.
How often should I review my small-cap mutual fund investments?
Investors should review their mutual fund investments regularly to ensure they align with their investment goals and risk tolerance. Consulting with a financial advisor can also be helpful in making investment decisions and portfolio adjustments.
