Top Seven Small Cap Mutual Funds:Top 7 small cap mutual funds of the country have given excellent returns in the last 1 and 5 years. The 1 year return of the direct plan of the scheme giving the highest return in 1 year has been 67.11%. At the same time, the return of the seventh scheme has been 49.45%. At the same time, the return of the highest profitable scheme in 5 years has also been more than 48%. The special thing is that all these funds have given much higher returns than both the major benchmarks of the category. But for an investor, it is not enough to just see the tremendous returns of small cap funds. The right investment strategy can be made only when along with returns, risk is also kept in mind. Here we will discuss both these things.
Top 7 small cap funds according to returns in 1 year
Scheme Name / Returns in 1 Year (Direct Plan)
- Bandhan Small Cap Fund : 67.11 %
- Invesco India Smallcap Fund: 55.72%
- ITI Small Cap Fund : 54.88 %
- Mahindra Manulife Small Cap Fund : 52.89 %
- Quant Small Cap Fund: 49.73%
- LIC MF Small Cap Fund : 49.58 %
- Tata Small Cap Fund : 49.45 %
All these small cap funds are those which have given much better returns in 1 year compared to both the major benchmark indices of this category, BSE 250 Smallcap TRI and NIFTY Smallcap 250 TRI. You can see the last 1 year returns of these two benchmarks here:
Category benchmark indices and their returns
BSE 250 SmallCap Total Return Index (1 year return) : 43.67 %
NIFTY Smallcap 250 Total Return Index (1 year return) : 45.26 %
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Small cap funds gave high returns even in 5 years
Not only in 1 year, but also in 5 years, the top 7 small cap funds have given very good returns. Quant Small Cap Fund had the highest return of 48.80% in 5 years, while the 5-year return of the seventh scheme Invesco India Smallcap Fund was 34.59%. The returns of these seven schemes have also been quite good compared to their benchmark. In 5 years, the return of Nifty Smallcap 250 TRI has been 32.08% and the return of BSE 250 Smallcap TRI has been 31.48%.
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Top 7 small cap funds according to returns in 5 years
Scheme Name/Return in 5 Years (Direct Plan)
- Quant Small Cap Fund : 48.80 %
- Bank of India Small Cap Fund : 39.52 %
- Nippon India Small Cap Fund : 37.85 %
- Canara Robeco Small Cap Fund : 36.84 %
- Tata Small Cap Fund : 36.17 %
- Edelweiss Small Cap Fund: 35.47%
- Invesco India Smallcap Fund: 34.59%
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Advantages and disadvantages of investing in small cap funds
Small cap funds are always considered ahead in terms of giving high returns. But along with this, the risk level of small cap funds also remains quite high. This is the reason why all these small cap funds have been kept at very high risk level on the riskometer. Generally, investors are advised to keep a major portion of their equity exposure in large cap and mid cap funds and invest the smallest portion in small cap funds. Large cap shares belong to big and established companies, hence there is more scope for getting stable returns in them. But due to the fact that they have already grown a lot, their upside potential is considered less as compared to midcap and small cap. Whereas mid cap companies have the possibility of becoming large cap in future, due to which their growth potential is considered much better. Similarly, small cap shares also have the potential to grow rapidly in the future. But since they are comparatively small businesses, the risk in them is also higher.
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What should retail investors do?
Retail investors should give priority to investing in those mutual funds like multi cap or flexi cap, which also have some exposure to mid cap and small cap stocks. By doing this they will be able to take advantage of the hidden growth potential in mid cap and small cap stocks. It is better that small investors do not keep more than 10 percent of small cap funds in their portfolio directly. Considering the risks associated with them, it is important to take advice from your financial advisor before investing.
(Disclaimer: The purpose of this article is only to provide information, not to advise investment in any fund. Investments made in equity mutual funds are directly affected by the ups and downs of the stock market. Any investment decision should be taken by your investment advisor. Do it only after taking advice from.)