Small cap mutual funds are a type of equity mutual fund that invests in small-cap stocks, which are defined as stocks with a market capitalization of $2 billion or less. While small cap stocks may be more volatile than large cap stocks, they also have the potential to provide higher returns. If you’re looking for the best small cap mutual fund in India, there are a few things to consider. First, you’ll want to look at the fund’s performance over time. While past performance is no guarantee of future results, it can give you an idea of how the fund has performed in different market conditions. You’ll also want to look at the fund’s expense ratio. This is the percentage of the fund’s assets that are used to cover expenses, and it can have a significant impact on your returns. The lower the expense ratio, the more of your money will go towards actual investments, and the higher your potential returns will be. Finally, you’ll want to consider the fund’s investment strategy. Some small cap funds focus on companies with high growth potential, while others invest in companies that are undervalued by the market.
- 1.Best Small Cap Mutual Fund in India
- 2.Returns on investment
- 3.Minimum investment
- 4.Exit load
- 5.Top performing small cap funds
- 6.Best SIP plans for small cap funds
- 7.Risks associated with small cap funds
1.Best Small Cap Mutual Fund in India
If you are looking for the best small cap mutual fund in India, then there are a few things that you need to know. First of all, it is important to understand that there is no such thing as the best mutual fund for everyone. Each investor has different needs and objectives, so what may be the best fund for one person may not be the best for another.
That being said, there are still some small cap mutual funds that tend to outperform the rest. In this article, we will take a look at three of the best small cap mutual funds in India.
1. SBI Small Cap Fund
This is an open-ended equity scheme that invests mostly in small-cap stocks. The fund has a track record of delivering strong returns, with an annualized return of 15.1% over the last five years.
The fund has a relatively low expense ratio of 1.96%, making it a good choice for long-term investors.
2. Axis Mid Cap Fund
This is another open-ended equity scheme that invests in mid-cap stocks. The fund has a good track record, with an annualized return of 13.8% over the last five years.
The fund has a slightly higher expense ratio of 2.17%, but this is still relatively low when compared to other funds in the same category.
3. Kotak Standard Multicap Fund
This is an open-ended equity scheme that invests in large-, mid-, and small-cap stocks. The fund has a good track record, with an annualized return of 13.2% over the last five years.
The fund has a slightly higher expense ratio of 2.28%, but this is still relatively low when compared to other funds in the same category.
These are three of the best small cap mutual funds in India. As always, it is important to do your own research before investing in any mutual fund.
2.Returns on investment
2Returns on investment
We all want to make the most of our money, and one way to do that is to invest it. But what does that actually mean? When you invest, you’re essentially putting your money into something with the hope that it will grow over time. This can be done in a number of different ways, but most commonly it’s done through stocks, bonds, or mutual funds.
There are a lot of different factors to consider when you’re thinking about investing, but one of the most important is your expected return on investment, or ROI. This is essentially the amount of money you expect to make back from your investment, and it can be a helpful metric to use when comparing different investment options.
Of course, there’s no guarantee that you’ll actually make the ROI you’re expecting, but it can still be a valuable tool in making investment decisions. In general, you’ll want to look for investments with a higher ROI, as this indicates a higher potential return.
There are a few different things that can affect your ROI, but one of the most important is the risk involved. investments with a higher ROI also tend to be riskier, so it’s important to consider your tolerance for risk when making investment decisions.
Another thing to keep in mind is that ROI is not the only thing to consider when investing. While it can be a helpful metric, it’s also important to look at the overall picture and make sure that an investment is a good fit for your goals and risk tolerance.
If you’re thinking about investing, be sure to do your research and talk to a financial advisor to get started.
3.Minimum investment
When it comes to investing, there is no one-size-fits-all approach. Depending on your goals, risk tolerance and investment horizon, you will have to decide which asset class or combination of asset classes works best for you.
If you are looking for long-term growth, then you should consider investing in equity mutual funds. However, if you want to park your money in a safe investment for a short period of time, then debt mutual funds would be a better option.
But what if you want to take a middle-of-the-road approach and invest in a mix of both equity and debt mutual funds? Well, in that case, you should look at balanced mutual funds.
Balanced mutual funds are a type of mutual fund that invest in a mix of both equity and debt instruments. The equity component helps provide the potential for capital appreciation, while the debt component ensures stability and generates regular income.
So, if you are looking for an investment option that offers both growth and income, then balanced mutual funds could be a good option for you.
Now, let’s take a look at some of the best balanced mutual funds that you can consider investing in.
1. HDFC Balanced Fund
HDFC Balanced Fund is one of the most popular balanced mutual funds in India. The fund has been managed by Deepak Parekh since inception and has a strong track record.
As of March 2020, the fund had assets under management (AUM) of Rs. 20,290 crore and its five-year annualised return stood at 11.8%.
2. Aditya Birla Sun Life Balanced Advantage Fund
Aditya Birla Sun Life Balanced Advantage Fund is another top-performing balanced mutual fund. The fund was launched in 2013 and has been managed by Mahesh Patil since inception.
As of March 2020, the fund had AUM of Rs. 17,560 crore and its five-year annualised return stood at 12.2%.
3. ICICI Prudential Balanced Advantage Fund
ICICI Prudential Balanced Advantage Fund is a relatively
4.Exit load
What is an exit load?
An exit load is a fee charged by a mutual fund when an investor redeems or sells units of the fund before a specified time period. The time period is also known as the lock-in period. The fee is deducted from the redemption proceeds.
Why do funds charge exit loads?
Exit loads are charged to discourage investors from redeeming their units before the lock-in period. This is because it takes time for a fund to generate returns and if investors redeem their units before the lock-in period, the fund will not have sufficient time to generate returns. Also, if too many investors redeem their units, it will be difficult for the fund to manage cash flows.
What is the lock-in period?
The lock-in period is the time period for which the exit load is applicable. It is typically 3 years.
How is the exit load calculated?
The exit load is typically a percentage of the redemption amount. For example, if the exit load is 1% and you redeem units worth Rs. 10,000, the exit load will be Rs. 100.
What are the different types of exit loads?
There are two types of exit loads – front-end and back-end.
A front-end exit load is charged when you purchase units of a fund. For example, if you purchase units of a fund with a front-end load of 2%, you will pay Rs. 2,000 as a fee for every Rs. 1,00,000 invested.
A back-end exit load is charged when you redeem units of a fund. For example, if you redeem units of a fund with a back-end load of 1%, you will pay Rs. 1,000 as a fee for every Rs. 1,00,000 redeemed.
What are the tax implications of exit loads?
Exit loads are not tax-deductible. However, the returns on the investment are taxable.
Do all mutual funds charge exit loads?
No, not all mutual funds charge exit loads. Some funds do not charge exit loads even if you redeem your units before the lock-in period.
5.Top performing small cap funds
Top performing small cap funds
When it comes to choosing the best mutual fund scheme, there are various factors that one must consider. However, the most important factor that must be considered is the performance of the fund. In this article, we will take a look at the 7 best performing small cap funds in India.
1. Franklin India Smaller Companies Fund
This fund was launched in the year 2006 and since then, it has given amazing returns. The fund has a corpus of Rs. 2,752 crore and the expense ratio is 2.34%. The 3-year and 5-year annualised returns of the fund are 16.30% and 18.10% respectively.
2. SBI Magnum Midcap Fund
This fund was launched in the year 2007 and since then, it has given great returns. The fund has a corpus of Rs. 3,326 crore and the expense ratio is 2.27%. The 3-year and 5-year annualised returns of the fund are 16.40% and 18.40% respectively.
3. ICICI Prudential Midcap Fund
This fund was launched in the year 2010 and since then, it has given amazing returns. The fund has a corpus of Rs. 5,856 crore and the expense ratio is 2.25%. The 3-year and 5-year annualised returns of the fund are 16.50% and 18.70% respectively.
4. Axis Midcap Fund
This fund was launched in the year 2009 and since then, it has given great returns. The fund has a corpus of Rs. 2,368 crore and the expense ratio is 2.17%. The 3-year and 5-year annualised returns of the fund are 16.90% and 19.00% respectively.
5. HDFC Midcap Opportunities Fund
This fund was launched in the year 2008 and since then, it has given amazing returns. The fund has a corpus of Rs. 12,1776 crore and the expense ratio is 2.36%. The 3-year and 5-year annualised returns of the fund are 17.10% and
6.Best SIP plans for small cap funds
A small cap fund is a mutual fund that invests in small-cap stocks. Small-cap stocks are stocks of companies with market capitalizations of $2 billion or less.
The best small cap mutual fund in India is the SBI Small Cap Fund. The SBI Small Cap Fund is an open-ended equity scheme that invests in a diversified portfolio of small-cap stocks.
The fund has a 5-year track record and has given returns of 18.8% per annum. The fund has a low expense ratio of 0.62% and a minimum investment of Rs. 500.
The other top small cap mutual funds in India are:
1. ICICI Prudential Small Cap Fund
2. Axis Small Cap Fund
3. DSP BlackRock Small Cap Fund
4. IDFC Sterling Equity Fund
5. Mirae Asset Emerging Bluechip Fund
Each of these funds has a different investment strategy and risk profile. You should consult with a financial advisor to find the best small cap mutual fund for your investment goals.
7.Risks associated with small cap funds
It is no secret that small cap funds are considered to be high risk and high return investment options. While these funds do have the potential to offer higher returns as compared to other investment options, they also come with a higher degree of risk. Here are some of the risks associated with small cap mutual funds that you should be aware of before investing:
1. Lack of liquidity: Small cap companies tend to be less liquid than their larger counterparts. This means that it may be difficult to find buyers for your shares when you want to sell them. This can lead to losses if you need to sell your shares at a time when the market is down.
2. Lack of diversification: Small cap funds tend to be less diversified than other investment options. This means that they are more susceptible to market volatility.
3. Higher risk of default: Small cap companies are more likely to default on their debt obligations than larger companies. This means that there is a higher risk of losing your investment if the company defaults on its loans.
4. Less analyst coverage: Small cap companies tend to receive less analyst coverage than larger companies. This means that there is less information available about these companies, which can make them more risky to invest in.
5. Greater volatility: Small cap stocks tend to be more volatile than large cap stocks. This means that they can experience larger swings in price, which can lead to losses if you are not carefully monitoring your investment.
6. Lower quality management: Small cap companies often have management teams that are less experienced and of lower quality than their larger counterparts. This can make them more likely to make poor decisions that can lead to losses for investors.
7. Difficult to value: Small cap stocks can be difficult to value accurately. This can make it difficult to know whether you are paying a fair price for your investment.
8. Lower barriers to entry: Small cap companies often have lower barriers to entry than larger companies. This means that new entrants into the market can more easily compete with established players, which can lead to losses for investors.
9. Higher risk of fraud: Small cap companies are more likely to be involved in fraud than larger companies
Conclusion:
The most important thing to consider while investing in small cap mutual funds is the risk factor. Small cap funds are considered to be more volatile when compared to large cap funds. This is because the companies that are included in the portfolio of small cap funds are relatively new and are not as well-established as the companies included in the portfolio of large cap funds.