Small cap mutual funds are those in which an investment has been made in companies with market capitalization up to Rs. 5000 crores. In NSE along with BSE of India, these companies generally belong to the category of market capitalization of less than 250. Due to the high returns that are expected of small cap funds, many new investors are usually attracted to the fund. However, it is equally important to understand that small-cap businesses are generally volatile along with prone to sharp movements in the stock market. However, you can also use a mutual fund sip calculator for better results. Hence, while evaluating small-cap funds, a return of three or five years may not be sufficient to bring out the real picture to the investors who might be planning to invest in the mutual fund for a period of 10 years or more.
Top 5 Small Cap Mutual Funds
Some of the top small-cap funds in India are listed below:
1. Direct Plan Growth for Quant Small Cap Funds
With the top 20 companies in terms of the investment quantity contributing to about 62% of the capital, or 3. 1% on average. The financial sector is along with consumer staples among most popular sectors. The fund has expense ratio of 0.62% along with a 1% exit load for investors who redeem their investments before the end of a year.
2. Axis Small Cap Fund Direct Plan Growth
The expense ratio for this fund is 0.54%. It has an exit load but no lock in period has been attached to the fund. It already has over 9 years of experience alongside has investments in some of the companies such as Galaxy Surfactants Limited, CCL Products India Limited, in addition to Narayana Hrudalaya. But if the fund is redeemed before completion of one year of investment, then there is an exit load.
3. Nippon India Small Cap Fund Direct Growth
This fund is also very diversified; only thirty percent of all the investments are in the top 20 firms on investment quantity. It is also important to understand that the most invested in sectors are capital goods, financial and chemicals. In total, the fund has a 0. 812) 92% expense ratio and 1% exit load in case of early redemption of the investment within the first month.
4. Kotak Small Cap Fund Direct Growth
Despite the fact that the top company in terms of investment is in the metals and mining sector, this fund has its largest sectoral investment in the chemicals sector. The fund has an exit load for redemptions made within a year of the date of allotment, and its expense ratio is 0.59%.
5. Direct Plan Growth for SBI Small Cap Funds
This fund only allows SIPs, with a Rs.500 minimum. It has a 1% exit load for redemptions made prior to a year from the date of allotment, and an expense ratio of 0.7%. Established in July of 2009, the fund is somewhat outdated. Top investments include Blue Star, Triveni Turbine, and TREPS, among others.
Conclusion
Although they have a higher potential for returns, small cap mutual funds are more volatile. Quant, Axis, and Nippon India, along with Kotak, as well as SBI Small Cap Funds are among the best funds for 2024. Each has different expense ratios, diversified sector allocations, and special strengths. When selecting these funds for their portfolio, investors ought to take their time horizon and risk tolerance into account.
