With an average return of up to 36% since last Diwali, this Bandhan fund tops the chart of smallcap MF returns

Bandhan Small Cap Fundthe first in the category, offered a return of 60.36% since the last Diwali. LIC MF Small Cap Fund returned 45.02% over the same period, followed by ITI Small Cap Fund which returned 44.94% over the same horizon.

Tata Small Cap Fund and Quant Small Cap Fund obtained returns of 43.45% and 43.25% respectively since November 2023. Nippon India Small Cap Fundthe largest small cap fund, obtained a return of 40% in the mentioned period.

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Canara Rob Small Cap Fund and SBI Small Cap Fund offered returns of 34.48% and 34.38% respectively. Franklin India Smaller Companies Fund returned 34.34% in the said period.

HDFC Small Cap Fund has returned 28.99% since November 12, 2023. Union Small Cap Fund and Quantum Small Cap Fund have returned 25.18% and 20.08% respectively in the same period. After observing the performance of small cap funds since last Diwali, are you looking to make an investment in these funds? Will they continue to work in a similar way? “We believe it still makes sense to include small-cap stocks in a portfolio, especially for investors with a three- to five-year time horizon. “Small caps don’t create froth like midcaps, and because they have a longer tail bond list than midcaps, which only have 150 stocks, fund managers have more options,” Amar said. Ranu, Director of Investment Products. & Insights, Anand Rathi Shares and Stock Brokers.

“Furthermore, as business models in many sectors undergo massive changes, technology-driven disruptions are driving the growth of numerous small businesses operating in niche markets. Going forward, earnings growth of small caps is expected to be between 20-22 per cent,” he added.

Since last Diwali, two new small cap funds have been launched. Motilal Oswal Small Cap Fund, JM Small Cap Fund have been launched and TRUSTMF Small Cap Fund is still in its NFO period.

The small cap schemes are compared to Nifty Smallcap 250 – TRI and BSE 250 Small Cap – TRI, which gained 38.20% and 38.24% respectively since last Diwali.

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“Given that there is a lot of room to generate significant wealth in small caps, especially when there are many startups or businesses that are ready to list, the recent correction of around 7% in small caps makes the allocation even more advantageous. However, you have to be careful while allocating assets and respect the asset allocation based on your risk tolerance,” advised Amar Ranu.

Small cap schemes invest in very small companies or their shares. This is why investing in small cap stocks is considered extremely risky. The small cap segment can be extremely volatile in the short term, but has the potential to deliver very high returns over a long period. Small cap schemes are recommended only to aggressive investors with a high risk appetite and a long investment horizon, say seven to ten years. ETMutualFunds does not recommend small cap schemes to new and inexperienced investors.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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