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A Look At The Best Small Cap Funds In India


Some of the Small Cap Funds in India have in the last three years, given returns that have beaten large cap funds. Benchmark indices in the last one year have tanked and this has also dragged returns of small cap funds down.


A Look At The Best Small Cap Funds In India
But, some of the best small cap funds in India have beaten returns of the Sensex and the Nifty in the last three years. We have selected two such small cap funds based on their 3 year performance; ratings by Crisil and from ratings by Value Research online. We have also studied the potential of stocks in the portfolio for superior returns.

DSP Blackrock MicroCap Fund

The objective of the fund is to invest in companies beyond the top 300 market capitalization. This probably means that it would be very small cap companies. If you study the portfolio of the company you see that the companies that are its top 5 holdings include KPR Mills, SRF, Navin Flourine, Aarti and 8K miles Software.

These are really small cap companies, which have given whopping returns in the last 3 years. Crisil has ranked the fund as number one in the mid and small cap category. Value Research Online has given the portfolio a 4 star rating.

Coming to the returns, the fund has generated staggering returns of 32 per cent in the last 3 years, whereas the 5 year returns has been close to 20 per cent. This is extremely good by any stretch of imagination.

The portfolio seems to be pretty sound to garner further returns for the shareholders. With the markets having fallen in the last few months, the fund could be an interesting pick from the medium to long term perspective.

The expense ratio for the fund is currently at 2.4 per cent, with it having assets under management to the Rs 2200 crores.

Reliance Small Cap Fund

This fund has been rated by Crisil as number 1 and as the name suggests, invests only in small cap companies. The fund has got a 4 star rating from Value Research Online.


A look at the portfolio of the fund and one can see that some of the shares that form a bulk of the portfolio are stocks that have often been recommended by analysts. These include the likes of Naveen Flourine, TVS Motors, Genus Power and Atul among others.

The fund has given a whopping return of 32 per cent in the last 3 years, while the 5 year returns have been more tempered at 20 per cent. You can invest in the Reliance Small Cap fund, through an SIP of as small as Rs 100. The asset size of the fund is around Rs 2000 crores, while the expense ratio is almost 2.43 per cent.


While both of these funds have performed well in the past, even the best small cap funds are highly risky as compared to large cap funds. Only if you have a penchant for higher risk can you bet on small cap funds. The above is not a solicitation to invest in these funds. You may seek professional advise for investing purposes.

Read more about: tvs motors atul small cap funds
Story first published: Thursday, February 18, 2016, 8:42 [IST]
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