Top Rated Small Cap Funds With 1-Year Returns Over 100%

Updated: Thursday, June 24, 2021, 10:45 [IST]

When it comes to only long-term investment options, small-cap funds have the possibility to provide better returns than large-cap funds as they invest in small companies which have the potential to grow large in terms of market capitalization in the future. According to SEBI, small companies are those with a market capitalization of less than 250 on the stock exchange. Small cap funds have their asset allocation of 65% across equity and equity-related instruments. According to Value Research, small cap funds have outperformed large cap funds in terms of returns, with a handful of small cap funds have generated returns up to 173.78 in the last 1-year. So, as a matter of information and not as a recommendation to invest, here we've compiled a list of the high-rated small cap funds that have returned over 100 percent in the last 1-year.

Kotak Small Cap Direct Fund

According to Value Research, the 1-year returns of Kotak Small Cap Fund Direct-Growth are 114.89 percent. Chemicals, Engineering, FMCG, Construction, and Metals make up the fund's top holdings. Century Plyboards (India) Ltd., Carborundum Universal Ltd., Sheela Foam Ltd., Supreme Industries Ltd., and Persistent Systems Ltd. are the fund's top five holdings. The fund has Rs 4,294 crore asset under management (AUM) and a current NAV of Rs 154.11 as of June 23, 2021. The fund's expense ratio is 0.52% and the minimum SIP amount is capped at Rs 1000. As an exit load 1% will be charged by the fund if units in excess of 10% of the investment are withdrawn within 1 year of the initial deposit.

Nippon India Small Cap Direct Fund

According to Value Research, the Nippon India Small Cap Fund Direct- Growth returns for the last year are 103.43 percent. Engineering, Chemicals, FMCG, Services, and Technology comprises the bulk of the fund's holdings. Deepak Nitrite Ltd., TI Financial Holdings Ltd., Navin Fluorine International Ltd., Birla Corporation Ltd., and Bajaj Electricals Ltd. are the fund's top five holdings. The fund's expense ratio is 1.02 percent, which is higher than the other small cap funds in the category. The fund presently has Rs 14,318 Crore asset under management (AUM) and a NAV of Rs 76.29 as of June 23, 2021. The minimum SIP amount is Rs 100, and if redeemed within one year, an exit load of 1% is levied.

Top Rated Small Cap Funds

Here are the top-rated small-cap funds according to the data of Value Research:

Funds	NAV as of June 23, 2021	1-Year Returns in %	3-Year Returns in %	5-Year Returns in %	Rating
Axis Small Cap Fund Dir	55.24	80.23%	25.09%	21.46%	5 star
Kotak Small Cap Fund Dir	154.11	114.89%	23.94%	21.63%	4 star
SBI Small Cap Fund	99.71	85.98%	21.48%	23.85%	4 star
Nippon India Small Cap Direct Fund	76.29	103.43%	19.61%	22.90%	4 star
DSP Small Cap Fund Dir	98.21	88.20%	17.22%	15.84%	3 star
HDFC Small Cap Fund Dir	70.08	99.02%	14.05%	20.01%	3 star
ICICI Prudential Small Cap Fund Dir	45.78	99.83%	20.06%	17.59%	3 star
IDBI Small Cap Fund Dir	15.27	89.45%	12.67%	-	3 star
L&T Emerging Businesses Fund Dir	38.85	95.32%	12.74%	19.72%	3 star
UTI Small Cap Fund Dir	25.9	94.59%	18.37%	16.11%	3 star
ICICI Pru Small Cap Fund Dir	45.78	99.83%	20.06%	17.59%	3 star
Source: Value Research

Our take

Small-cap mutual funds, for instance, witnessed a strong surge in the fourth or last quarter of 2020, with good returns. According to the table above, several small-cap funds have generated returns of more than 100% in a year, while others have also performed well. The average returns of small-cap funds over the last 1-year is 95.3 per cent. Whereas, the average 3-year SIP returns are 37.75% and the average 5-year SIP returns are 22.02%, according to Value Research. As a matter of concern, small-cap funds are the ones that struggle the most when the stock market falls sharply. Small-cap funds can help you accomplish your long-term financial objectives if you are an investor with a high-risk appetite. To generate significant returns, stick with your purchases or hold them for a long time, but do not go with the past returns. But if you do not have much exposure to market behaviour or mutual fund investments and do not want to take a risk, it is better to avoid small-cap funds and stay invested or start investing in large, mid-cap or arbitrage funds.

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