This Small Cap Fund Has Been Rated No 1 By Crisil, Should You Start SIP?

How Crisil rates small cap and other mutual funds?

Unlike most other ranking models, which are based purely on returns or net asset value (NAV), Crisil Mutual Funds Ratings uses a combination of NAV and portfolio-based attributes for evaluation. This provides a single point analysis of mutual funds, taking into consideration key parameters such as risk-adjusted returns, asset concentration, liquidity and asset quality.

While most houses that rank mutual funds can do so on sound guidelines, there is no guarantee of returns and markets being extremely volatile there is no saying where returns could be headed. In any case let's highlight some of the things that are worth taking a look at for Kotak Small Cap Fund.

Kotak Small Cap Fund: Great performance

The Kotak Small Cap Fund has assets under management to the tune of nearly Rs 6,180 crores. This fund is backed by a solid performance and has generated returns of almost 71% in the last 1-year. Having said that there is no guarantee that similar returns would be churned out in the future as well. Markets are extremely volatile and one has to be careful before investing.

The fund has holdings in stocks like Century Plyboard, Sheela Foam, Persistent Systems, Galaxy Surfactants etc. All of these stocks have rallied sharply in the last 1-year, which has boosted returns. The minimum SIP investment required is Rs 1,000.

Should you invest in the Kotak Small Cap Fund through SIP?

It it were a lumpsum investment into a small cap fund, we would have definitely told investors to be cautious. This is because the stock markets have rallied a great deal since the covid 19 sparked a nationwide closure. In fact, indices have more than doubled in value since then. We believe that the markets are over priced and hence investors should not invest any amounts that are lumpsum. It is now more sensible to invest through the SIP route, which would be a smart strategy to adopt under the current situation. It's also important to remember that small cap mutual funds are risky, given that the invest only in companies with a small market capitalization. Having said that we are not advising any investment in mutual funds at this stage. All we are doing is informing readers of a well-rated fund.

We are unsure of where the markets will head from here on, given the way the Omicron variant is spreading. With increasingly new variants spreading every few months, I guess the markets would have to live with covid variants for a long-time. So expect volatility and invest only if you have an appetite for risk.

Disclaimer

Investing in equity mutual funds is risky and investors are advised caution. Invest only if you have an appetite to take risk. Please be informed neither Greynium Information Technologies Pvt Ltd nor the author are liable for any losses caused as a result of decisions based on the article.