2 Small-Cap Mutual Fund SIPs, Ticked Upto 169% Return: Morningstar Rated

Mutual funds or SIP investments are suitable for investors who are ready to take the risks related to the equity markets. At present, the stock markets in India and the global picture are not much bullish, however, in the long term, many mutual funds and SIPs have given better returns than the traditional investment methods like FDs. In the past two years, the SIP segment in India has boomed due to considerably good growth. Here, two small-cap mutual fund SIPs are discussed. These two mutual funds and SIPs are rated 4 star by reputed rating agency Morningstar.

1. DSP Small Cap Fund - Regular Plan-Growth

DSP Small Cap Fund - Regular Plan - Growth's NAV stood at Rs. 103.28, and its fund size is Rs. 8848.57 Crore. The Expense ratio is 1.93%, while the category average is 1.89%. DSP Small Cap Fund - Regular Plan - Growth's absolute returns of SIP has been the most lucrative in the long-term.

In the last 1 year its SIP return stood at -1.72%, in the last 2 years it has fetched 34.13% returns, in the last 3 years it has fetched 57.3% returns, and in the last 5 years, it has fetched 63.82% returns. In the past 2 years, this Fund's annualized returns of SIP stood at 31.13%.

In the last 1 year its mutual fund return stood at 21.47%, in the last 2 years it has fetched 145.16% returns, in the last 3 years it has fetched 96.71% returns, and in the last 5 years, it has fetched 66.51% mutual fund returns. In the past 2 years, this Fund's annualized mutual fund returns stood at 56.48%, while the category average was marginally lower at 56.38%.

This Fund's Equity Holding is 95.57%, and 4.43% is in other sectors. This fund's Mid Cap Investments are 4.81%, Small Cap Investments are 74.66%, and 16.1% investments are allocated in the other funds. The top 5 equity holdings of the fund are: Chambal Fertilizers & Chemicals Ltd. GHCL Ltd. (Chemicals - inorganic), Suprajit Engineering Ltd., (Auto ancillaries), Tube Investments Of India Ltd. (Auto ancillaries), and Atul Ltd. (Chemicals - speciality).

2. Kotak Small Cap Fund - Growth

Kotak Small Cap Fund - Growth's NAV stood at Rs. 149.41, and its fund size stood at Rs. 7384.59 Crore. The Expense Ratio of the fund is 1.85%, while the category average is 1.89%. Considering the recent downfall in the equity market, the long-term SIP and mutual fund investments have been more profitable for the investors.

In the last 1 year its SIP return stood at -4.03%, in the last 2 years it has fetched 38.24% returns, in the last 3 years it has fetched 65.49% returns, and in the last 5 years it has fetched 79.97% returns. In the past 3 years, this Fund's annualized returns of SIP stood at 35.64%.

In the last 1 year its mutual fund return stood at 20.26%, in the last 2 years it has fetched 169.51% returns, in the last 3 years it has fetched 122.89% returns, and in the last 5 years it has fetched 102.40% mutual fund returns. In the past 2 years, this Fund's annualized mutual fund returns stood at 64.06%, while the category average was marginally lower at 56.38%.

This Fund's Equity Holding is 95.40%, and 4.60% is in other sectors. This fund's Large Cap Investments are 2.01%, Mid Cap Investments are 12.21%, Small Cap Investments are 67.8%, and 13.38% investments are allocated in the other funds. The top 5 equity holdings of the fund are Century Plyboards India Ltd., Sheela Foam Ltd., Carborundum Universal Ltd. (Abrasives), Amber Enterprises India Ltd. (Air conditioner), and Galaxy Surfactants Ltd. (Chemicals - speciality).

Performance Comparison

Comparing these two funds' returns from SIPs, it can be said that, in the long-term, the Kotak Small Cap Fund-Growth fund has performed much better than the first fund. However, in the short term (In the last 1 year), the DSP Small Cap Fund - Regular Plan - Growth has generated lesser de-growth. So, investors should be careful before selecting, their preference on the long-term or short-term investment policy. Similarly, in the past 1 year, both of these funds have generated a similar level of growth. However, the Kotak Small Cap Fund - Growth's long-term mutual fund returns are much better. However, the first fund comes with a lower NAV and a better asset size that decides the fund's liquidity.

Before comparing these two funds, an investor should remember that these are small-cap funds. It is known that in the long term, the small-cap funds and stocks perform much better than in the short term. These funds invest in small-cap stocks, which means most of the selected companies are developing companies. In the long term, they might perform better. In the past few months, the global equity markets are already in pressure due to multiple reasons like interest rate hikes by the central banks, inflation concerns, and global geopolitical tensions. Hence, these mutual funds and SIPs should be considered in the long term. Additionally, the equity markets are generally very volatile; investors should be open to related risks.

Disclaimer

Investing in equities/mutual funds/SIPs poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, and the author are not liable for any losses caused as a result of decisions based on the article.

(Data mentioned as on May 16, 2022)

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