Top 10 Small Cap Funds with Maximum Return:Mutual funds are considered a better way of wealth creation in the long term. Especially small cap funds are known for their high returns. The returns of the last 5 years of top 10 small cap funds also show that these funds have the potential to increase the wealth of investors manifold. For example, the top 10 small cap funds have increased investors’ money from 4 times to almost 7 times in 5 years. What is the reason for this high return of small cap funds and should you invest in them only to earn huge profits? Or is it important to understand some other things besides returns before deciding to invest? We will discuss all these questions further. But first let’s take a look at the top 10 small cap funds and their returns.
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10 schemes giving 4 to 7 times returns in 5 years
Top 10 small cap mutual funds have grown investors’ money from 4 times to almost 7 times in the last 5 years. You can see the information about the average annual return of all these funds and the value of investment of Rs 1 lakh after 5 years:
1. Quant Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 47.46%
Value of Rs 1 lakh in 5 years: Rs 6,98,775
Expense ratio: 0.64%
2. Bank of India Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 39.38%
Value of Rs 1 lakh in 5 years: Rs 5,27,055
Expense ratio: 0.46%
3. Nippon India Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 36.92%
Value of Rs 1 lakh in 5 years: Rs 4,82,013
Expense ratio: 0.68%
Also read: Highest Long Term Return: These equity funds were at the forefront in long term returns, increased their wealth 8 times in 10 years, SIP also showed magic.
4. Canara Robeco Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 35.92,
Value of Rs 1 lakh in 5 years: Rs 4,64,743
Expense ratio: 0.47%
5. Edelweiss Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 35.13,
Value of Rs 1 lakh in 5 years: Rs 4,51,326
Expense ratio: 0.38%
6. Tata Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 34.69,
Value of Rs 1 lakh in 5 years: Rs 4,44,009
Expense ratio: 0.34%
7. Invesco India Smallcap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 34.44,
Value of Rs 1 lakh in 5 years: Rs 4,39,963
Expense ratio: 0.41%
8. HSBC Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 33.15,
Value of Rs 1 lakh in 5 years: Rs 4,18,872
Expense ratio: 0.68%
9. Kotak Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 32.59,
Value of Rs 1 lakh in 5 years: Rs 4,10,375
Expense ratio: 0.49%
10. DSP Small Cap Fund (Direct Plan)
Average Annual Return (CAGR) in 5 years: 32.21,
Value of Rs 1 lakh in 5 years: Rs 4,04,508
Expense ratio: 0.84%
Also read: High Return Investment: This scheme made money 3 times in 5 years, 4346% absolute return since launch, 1 lakh became 44 lakhs
Outperforms benchmark index
The performance of all these small cap funds has been better than their benchmark index.All these small cap funds have two benchmark indices. The first benchmark is BSE 250 Small Cap Total Return Index (BSE 250 SmallCap TRI) whose 5-year average annual return (CAGR) has been 30.42%. The average annual return of the second benchmark Nifty Small Cap 250 Total Return Index (NIFTY Smallcap 250 TRI) for the last 5 years has been 31.21%.
Also read: Best Multi Cap Funds in 2024: This year was great for multi cap, top 9 funds gave returns ranging from 30% to 38%, this scheme became the topper.
What are small cap mutual funds?
Under SEBI rules, it is necessary to invest at least 65% of the assets of any small cap mutual fund in stocks of small cap companies. On the basis of market capitalization, companies outside the top 250 companies are considered small cap companies.
Features of small cap mutual funds
Small cap companies are in the early stages of their development and have high growth potential i.e. the ability to grow rapidly. But investing in these companies is also considered more risky. During a bull market, small cap funds generally have the ability to outperform mid cap or large cap funds. However, there are chances of weakness in their performance during bear market i.e. decline.
Don’t decide just by looking at returns
The decision to invest in small cap funds should not be made only on the basis of high returns. This is because along with the possibility of huge profits, there is also the possibility of high risk. Therefore, before taking any decision, definitely assess your financial situation and risk taking ability. While investing in small cap funds, one should always take a long term view, because these funds can give better returns only in the long run. If you are ready to take more risk and want to invest from a long term perspective, then you can think of including small cap funds in your portfolio. But the share of small caps in the entire portfolio should not be more than 10-15 percent.
(Disclaimer: The purpose of this article is only to provide information and not to advise investment in any fund. There is no guarantee that the past returns of equity mutual funds will continue in the future. Investment decisions should be taken only after taking the opinion of a SEBI approved investment advisor. Do.)
