Small cap funds that invest pre-dominantly in the small cap stocks saw a good performance helped by a sharp traction of late in the small cap stocks, after sharp run up though there has been some pause now and the indices providing the performance of small cap scrips have fallen by a substantial bit for the current ongoing month, with Nifty small cap down by almost 4%, but here we cannot ignore the massive gains of 42% on the Nifty small cap 100 index on a YTD basis.
Nevertheless as these small caps now depict of a significant growth potential which can be made out from the increase in promoter shareholding over the quarters, these can be a good pick for the long run if you are aiming at higher return that though comes with a significant risk. While past performance is not always a criteria to go about for both stocks as well as mutual fund, it can definitely be considered for still having a better sense of which mutual funds performed well in a category, so taking a medium term view of say 3 years, here we list out 5 such small cap mutual funds that have delivered the highest returns and you can definitely bet on after ensuring that all other factors are also favourable in respect of the fund.
1. Quant Small Cap Fund:
This fund has 25 years of history meaning it's an old plan and since launch the fund has yielded return to the tune of 11.58%. The fund size however is small considering its long history of just over Rs. 1000 crore as on July 31, 2021. As of August 18, the growth plan of the fund commands an NAV of 119.12.
The scheme works with objective to offer capital appreciation & provide long-term growth opportunities by investing in a portfolio of Small Cap companies. There is no assurance that the investment objective of the Scheme will be realized.
Those with a penchant for very high risk and investment horizon of a minimum of 3 years can park your money into the scheme for good gains. Here for this particular fund, the minimum of 75 percent is parked in small caps and hence highly risky.
In the last one year, this small cap fund from the house of Quant mutual fund has outperformed the benchmark Nifty 50 index, while its performance is benchmarked to Nifty Smallcap 250 TRI.
SIP in the fund can be initiated for Rs. 1000 and there is 1% load charged in case there is redemption before 1 year.
Top holdings of the fund include Indiabulls Real Estate, Caplin Point, India Cements, EID Parry, Stylam and Just Dial etc.
2. Axis Small Cap fund:
This fund commands a reasonable fund size of Rs. 6785 crore and charges an expense ratio of 1.99% as on June 30, 2021. NAV of the regular plan (Growth) is 55.09. The fund as per the risk-o-meter is placed in the moderately high risk category.
For this particular fund, exposure into the small cap stocks for a higher return is over 70%. In the last one-year the fund has underperformed its benchmark and provided returns to the tune of 76% as against Nifty Small cap 100 TRI of 84.88%.
The fund is in existence since 2013 and since then has yielded a higher return of over 24%. So for good enough returns, you can either enter through the lump sum route or via SIP which can be booked for just Rs. 500. Top stock holdings in the fund are Galaxy Surfactants, Tata Elxsi, JK Lakshmi Cement, CCL Products etc.
3. Kotak Small Cap Fund
It is again a small-sized small cap fund from the boutique of Kotak Small Cap fund and is benchmarked for performance to NIFTY Smallcap 100 TRI. The fund is in existence since the year 2005. Expense ratio charged is 1.97% as on July 31, 2021. It is a CRISIL 5-Star rated fund, while the other 2 rating agencies Morning Star and Value Research have accorded the fund a 4-Star rating.
The fund invests in chosen small-sized companies that have the potential to become tomorrow's large-cap.
SIP in the fund can be kick-started for a sum of barely Rs. 1000 and for lump sum investment you will need to put in a minimum of Rs. 5000.
Top stock holdings of the fund are Carborundum, Sheela Foam, Lux Industries, Persistent Systems, Blue Star etc.
Best Performing Small Cap Funds Based On Last 3-Years Performance
|all Cap fund||Annualised 3-year performance in %||SIP investment of Rs.1000 per month started 3 yrs hence is now valued at||SIP annualized returns in 3 years||Rating|
|Quant Small cap fund||32.08||Rs. 85,149||64.67%||MorningStar 4-Star rated|
|Axis Small Cap Fund||25.87%||Rs. 63,390||40.38%||Value Research 5-Star Rated and MorningStar and CRISIL 4-Star rated|
|Kotak Small Cap Fund||25.65%||70385||48.72%||CRISIL 5-Star and MorningStar, Value Research 4-Star rated fund|
Aim of the story is just to provide inputs on the best performing small cap funds and the story need not be construed as a financial investment advice. We are not a qualified financial advisor so for any investment decision it shall be better to seek an investment advise to ensure the safety of your principal amount and also to generate a higher return.