Markets have corrected a good bit, and small cap stocks have corrected even further. In fact, many small cap mutual funds are showing negative returns in the last one year of as much as 10 per cent. Here are a few small cap funds that we have selected that maybe good to build a mutual fund portfolio.
1. HDFC Small Cap Fund - Growth
This is a small cap fund that has sizeable assets under management of nearly 8,500 crores. The short term returns from the scheme has been awful, while the longer term returns has been much better. The 1-year returns has been -5.36 per cent, while the 2-years returns has been near 2 per cent.
The 5-year returns has been excellent at 13.36 per cent. The fund has holdings in Development Credit Bank, Sonata Software, NIIT Technologies, Federal Bank, Bank of Baroda etc.
The expense ratio of the fund is also much lower compared to other players. The one thing that investors should note is that small cap funds are risky and hence invest in them if you have an appetite for risk.
2. Axis Small Cap Fund - Growth
This fund has been a good performer, even when the markets are trading lower and small cap stocks have crashed. The fund has generated a return of 7.8 per cent in the last 1 year, while several small cap funds are struggling to make money. The 5-year returns has been close to 13 per cent.
The Axis Small Cap Fund has a good portfolio, comprising Galaxy Surfactants, City Union Bank, NIIT Technologies etc. Under the growth plan the current net asset value is Rs 28.22, while under the dividend plan the net asset value is Rs 23.21.
Investors can also invest by way of SIP that is by investing Rs 1,000 every month.
3. SBI Small Cap Fund - Growth
SBI Small Cap Fund has also generated fantastic returns over the medium to long term. The fund has generated returns of 18.45 per cent over the last 5 years. The 3-year returns from the fund has been close to 11.84 per cent. The fund has holding in some very good quality stocks including the likes of Hawkins Cookers, JK Cement, Sheela Foam among others.
Like most other small cap funds, in the near term it has faced some issues with returns, given the way small caps have cracked. However, in the more longer term it has given decent returns to investors.
Under the growth plan the NAV is currently Rs 49.32.
4. Reliance Small Cap Fund
This fund too has generated a decent return over the longer term. However, the returns are more volatile in the short term. While it has generated a return of 13 per cent in the last 5 years, the three year return has been dismal at -7 per cent.
The fund has holdings in stocks like Deepak Nitrate, Orient Electric, VIP Industries, Navin Flourine etc. It has a decent corpus size in excess of Rs 8,000 crores. The NAV under the growth plan is around Rs 37.