Small cap mutual funds are an attractive investment option for those seeking high growth potential. These funds primarily invest in companies with a market capitalization below 5000 crs, offering investors exposure to dynamic and fast-growing companies. Understanding the nuances of small-cap funds is crucial for investors looking to diversify their portfolios and capitalize on the growth opportunities presented by small-sized companies.
Fund Name | Rating | Catagory | 3 Yrs Return | 5 Yrs Return | Riskometer |
Quant Small Cap Fund - Growth - Invest Now | Small Cap | 47.87% | 36.91% | Very High | |
Bank of India Small Cap Fund - Growth - Invest Now | Small Cap | 33.39% | 31.57% | Very High | |
Nippon India Small Cap Fund - Growth - Invest Now | Small Cap | 40.58% | 30.48% | Very High | |
Axis Small Cap Fund - Growth - Invest Now | Small Cap | 29.87% | 27.85% | Very High | |
ICICI Prudential Smallcap Fund - Growth - Invest Now | Small Cap | 32.14% | 27.79% | Very High | |
Kotak Small Cap Fund - Growth - Invest Now | Small Cap | 28.53% | 27.32% | Very High | |
Invesco India Smallcap Fund - Growth - Invest Now | Small Cap | 32.57% | 27.07% | Very High | |
Tata Small Cap Fund - Growth - Invest Now | Small Cap | 35.14% | 26.89% | Very High | |
Union Small Cap Fund - Growth - Invest Now | Small Cap | 30.82% | 26.71% | Very High |
What are Small Cap Mutual Funds?
Small-cap mutual funds invest in companies with a market capitalization below 5000 Crores. These companies are often in the early stages of growth, with the potential to become mid or large-cap companies in the future. Small-cap funds aim to provide investors with exposure to the high growth potential of small-sized companies while diversifying risk through a portfolio of stocks across various sectors. Invest Now
Benefits of Small Cap funds
1. High Growth Potential: Small-cap stocks have the potential to grow significantly faster than large-cap stocks, offering investors the opportunity for higher returns.
2. Diversification: Small-cap funds invest in a diversified portfolio of small-cap stocks, reducing risk compared to investing in individual stocks.
3. Market Inefficiency: The small-cap segment of the market is less efficient than the large-cap segment, providing opportunities for skilled fund managers to identify undervalued stocks. 4. Portfolio Growth: Small-cap funds can be an essential component of a diversified portfolio, providing growth potential and reducing overall portfolio risk.
Small Cap funds performance
Small-cap funds have the potential to outperform both large-cap and mid-cap funds over the long term. However, they can be more volatile than large-cap funds, making them suitable for investors with a higher risk tolerance. The performance of small-cap funds is closely tied to the economic cycle, with these funds typically performing well during periods of economic expansion.
Risk in Small Cap funds
Investing in small-cap funds comes with certain risks, including higher volatility compared to large-cap funds. Small-cap stocks are also more susceptible to economic downturns, as these companies may not have the same level of financial stability as larger companies. Additionally, small-cap funds may be less liquid than large-cap funds, making it harder to buy or sell fund units, especially during market downturns.
How to choose to Small Cap funds
When selecting a small-cap mutual fund, investors should consider factors such as the fund’s track record, expense ratio, investment philosophy, and portfolio composition. It’s essential to assess the fund’s performance against relevant benchmarks and understand the fund manager’s strategy and approach to investing in small-cap stocks.
Conclusion – Small Cap funds
Small-cap mutual funds offer investors a compelling opportunity to capitalize on the growth potential of small-sized companies. While they may be riskier than large-cap funds, small-cap funds can provide diversification benefits and higher returns over the long term. By understanding the characteristics, benefits, and risks of small-cap funds, investors can make informed decisions and enhance their investment portfolios with exposure to dynamic and fast-growing companies in the small-cap segment.
Disclaimer
Any information mentioned above is not a recommendation. Please do your research before investing in mutual funds. Investing involves risks, and users should carefully consider their financial situation and risk tolerance before engaging in any investment activities. Divadhvik does not endorse or guarantee the accuracy of third-party content or external links provided on the platform.
