Small-cap mutual funds are well known for their good returns in the short term. Here, the portfolio of a small-cap fund has been discussed.
Small-cap fund investment rationale
The Small-Cap mutual funds are mostly selected by investors due to their higher returns in the short term or near term. However, these funds are quite riskier than large-cap funds. The fund house will invest in companies with low market capitalization. The companies have better potential to grow both in the long term and short term because these are developing company stocks. These stocks are also highly volatile. When the equity market sinks during bearish sentiments, these stocks face the most challenges. On the other hand, large-cap mutual funds are way safer in terms of liquidity and assured returns.
DSP Small Cap Fund - Regular Plan - Growth
DSP Small Cap Fund - Regular Plan is a mutual fund SIP investment that has a NAV of Rs. 115.88, and the size - Of assets Under Management (AUM) of this fund is Rs. 8088.23 crore. AUM is the total market value of the assets which a mutual fund will manage at a point in time. On the other hand, the Expense Ratio (ER) of this fund is 1.89%, while the category average is 1.93%. The ER is marginally lower than the category average, so it can enhance the profitability for the investors. The Expense Ratio is the percentage, which the fund house will use from the retail investors' investments, for fund management purposes.
This mutual fund SIP has been best rated with 3 Star by reputed rating agency Value Research.
Absolute and annualized returns
As it is a small-cap fund, its absolute returns from SIPs have been reported higher in the short term. In the last 1-year SIP return stood at 15.1%, in the last 2 years it has fetched 59.78% returns, in the last 3 years it has given 79.79% returns, in the last 5 years, it has fetched 85.86% returns, and in the past 10 years, it has given 228.8% returns. Annualized returns from DSP Small Cap Fund - Regular Plan's SIP were 52.56% in the past 2 years, and 42.06% in the past 3 years.
DSP Small Cap Fund - Regular Plan's absolute mutual fund returns are the highest in 10 years terms. In the last 1 year return stood at 41.89%, in the last 2 years it has fetched 185.96% returns, in the last 3 years it has given 106.97% returns, in the last 5 years it has given 98.23% returns, and in the past 10 years, it has given 661.42% returns. In the past 2 years, the DSP Small Cap Fund - Regular Plan's annualized returns stood at 69.10%, while the category average stood at 69.33%.
(Data till April 8, 2022)
DSP Small Cap Fund - Regular Plan's total equity holding is 96.80%, and the rest of the 3.20% is invested in other sectors. Among total 68 stocks, the Fund's Mid Cap Investments are 5.36%, Small Cap Investments are 76.65%, and 14.79% investments are allocated to other funds.
The top 10 equity holdings of the fund are Chambal Fertilizers & Chemicals Ltd., Atul Ltd., K.P.R. Mill Ltd., Nilkamal Ltd., Suprajit Engineering Ltd., Sheela Foam Ltd., Ipca Laboratories Ltd., Tube Investments Of India Ltd., Ratnamani Metals & Tubes Ltd., and Triveni Engineering & Industries Ltd.
Other funds under this category are, BOI AXA Small Cap Fund - Regular Plan - Growth, Nippon India Small Cap Fund - Growth, and Quant Small Cap - Growth, etc.
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