Fund Overview: 3-Star Rated Small Cap Fund Outperformed Benchmark, Should You Invest? Details Inside

HDFC Small Cap Fund is a Small Cap Category equity fund by the HDFC Mutual Fund house. It is a 14 Years & 6 Months old fund launched on April 03, 2008, by the fund house. The fund has offered good returns since its inception. It delivered a 7.68% return in the past 6 months, which is by far better than its benchmark return of 0.14% in the same period of time. The fund has been rated 3 star by Value Research. Check out the fund's Objective, returns, portfolio, and other details below:

Investment Objective

The primary investment objective of the fund is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio of Small Cap companies. Suitable for Investors seeking to potentially enhance returns by investing in lesser known but promising businesses and Investors with higher risk appetite. Small-cap companies are frequently thought of as risky. On the other hand, a carefully chosen portfolio of well-researched small-cap stocks may be able to generate more value in the long run.

Investment Strategy

The Fund shall follow a predominantly small-cap strategy with a minimum exposure of 65% to Small-Cap stocks. The Fund may also seek participation in other equity and equity-related securities to achieve optimal portfolio construction.

The aim of the equity strategy will be to predominantly build a portfolio of small cap companies which have:
a) Reasonable growth prospects.
b) Sound financial strength.
c) Sustainable business models.
d) Acceptable valuation that offers potential for capital appreciation.

 

Fund Details

 

NAV (G)	Rs 84.3340
Inception Date	April 03, 2008
Fund Size	Rs 13,797 Cr
Exit Load	1% for redemption within 365 days
Benchmark	S&P BSE 250 SmallCap TRI
Min. Investment	Rs 100
Min.SIP Investment	Rs 100
Risk	Very High

Source- Value Research

Returns

Fund name	YTD	1D	1M	3M	6M	1Y	3Y	5Y	7Y
HDFC Small Cap Dir	0.49	1.84	0.66	17.88	7.68	4.58	26.08	16.14	18.06
S&P BSE 250 SmallCap TRI	-3.8	1.57	-0.47	15.82	0.14	0.26	26.34	10.12	13.22
Equity: Small Cap	-0.58	1.38	0.22	14.87	2.57	5	31.76	15.28	16.97

The return indicated that the fund has outperformed the benchmark over the past 7 years.

Source- Value Research

Sector Allocation

• Primarily a function of stock selection.
• Portfolio overweight/underweight vs benchmark controlled to manage portfolio risk by the Fund Manager.
• Portfolio to be invested between 90-100%, as far as possible.

Market Capitalization

94.32% of the assets are invested in Equities and 5.68% in cash and cash equivalent instruments. The fund has 63.37% investments in small-cap equities, followed by 3.99% in large-cap equities and 32.54% in mid-cap equities, respectively. The fund invests in 66 stocks, out of which the top 10 holds 32.36%, the top 5 holds 19.35% and the top 3 holds 43.94%, respectively.

Top 5 Holdings

Sector Wise holdings

Sector	Fund (%)
Services	20.46
Capital Goods	12.18
Financial	11.3
Chemicals	9.71
Consumer Discretionary	5.93

Top Holding

Company name	Sector	% Asset
Bajaj Electricals	Consumer Discretionary	4.9
Sonata Software	Technology	4.19
Bank Of Baroda	Financial	3.76
Firstsource Solutions	Services	3.66
eClerx Services	Services	3.66

Source- Value Research

Why Small Caps?

A business typically attracts more analysts as it grows in size. Higher multiples and better familiarity can result from improved disclosure levels. Institutional ownership frequently rises as businesses get bigger. Smaller equities that were mispriced may therefore be re-priced.

Disclaimer

Mutual fund investments are subject to market risk. Read all scheme related Documents, Terms and Conditions carefully before investing. The above-mentioned information is purely informational and doesn't guarantee any return. The Greynium Information Technologies and the Author are not liable for any losses caused as a result of a decision based on the article.