This Small-cap Mutual Fund SIP Recorded Upto 104% Returns, Rated By Crisil: Rationale for Small-cap Investment

According to the Association of Mutual Fund in India, "Average Assets Under Management (AAUM) of Indian Mutual Fund Industry for the month of December 2021 stood at Rs. 37,91,811 crore."

Investment rationale for small-cap funds

This growth has been influenced by India's domestic investors' focus on the equity markets. Mutual funds and SIPs are easier and more secure options to invest in the equity markets while diversifying the risk-quotient. Here A small-cap mutual fund SIP's portfolio has been discussed.

The objective of small-cap mutual fund investment is, the fund manager will select the stocks which are below the top 250 stocks in the exchanges, according to their market capitalization. High returns in a near-term period, are the most lucrative part of a small-cap investment. However, the small-cap funds will come with more risk factors. If you have a better risk appetite for good returns, you can select these funds. Additionally, you must check the portfolio of stocks, turnover, and fund size of a particular small-cap mutual fund, before investing to be sure about the liquidity of your investment.

L&T Emerging Businesses Fund - Direct Plan

L&T Emerging Businesses Fund - Direct Plan is a small-cap fund, that has been recorded quite higher returns than its peer funds in the past 3-4 years. This enormous growth is a result of the good stocks, this fund selected to invest in. The L&T Emerging Businesses Fund - Direct Plan's NAV stood at Rs. 52.49, and its fund size is Rs. 8189.63 Crore. The fund size is quite good, even more than some of the popular large-cap funds.

The Expense Ratio (ER) is 0.73%; which is similar to the category average at 0.74%. the operating cost or ER is not very high that it can hamper your profitability too far. This fund has been rated 3 star by rating agency Crisil.

Absolute and annualized returns

L&T Emerging Businesses Fund - Direct Plan's SIP's absolute returns are quite high compared to the market average. In the last 1-year SIP return stood at 38.57%, in the last 2 years it has fetched 93.95% returns, in the last 3 years it has fetched 102.44% returns, and in the last 5 years it has fetched 104.38% returns. Annualized returns of this fund's SIP were 78.89% in the past 2 years, and 77.96% in the past 1 years. The short-term SIP returns are also better than many other small-cap mutual fund SIPs.

L&T Emerging Businesses Fund - Direct Plan's absolute mutual fund returns stood highest in the above 5 years term. In the last 1 year return stood at 81.79%, in the last 2 years it has fetched 106.25% returns, in the last 3 years it has given 108.38% returns, and in the last 5 years it has fetched 177.89% returns. Additionally, in the past 2 year, the L&T Emerging Businesses Fund - Direct Plan's annualized returns stood at 43.40%.

Portfolio

L&T Emerging Businesses Fund - Direct Plan's Portfolio Turnover Ratio was 15.63%. This fund's equity holding is 98.96%, and 1.04% in others. L&T Emerging Businesses Fund - Direct Plan's Mid Cap Investments are 6.60%, Small Cap Investments are 68.91%, and 23.45% in other funds. The top 10 equity holdings of the L&T Emerging Businesses Fund's are, K.P.R. Mill Ltd. (Fabrics and garments), Grindwell Norton Ltd., Balrampur Chini Mills Ltd., Birlasoft Ltd., Carborundum Universal Ltd., Brigade Enterprises Ltd., Sonata Software Ltd., KPIT Technologies Ltd., Persistent Systems Ltd.

Other available funds in the peer are IDBI Small Cap Fund - Direct Plan, HSBC Small Cap Equity Fund - Direct Plan, Axis Small Cap Fund - Direct Plan, Kotak Small Cap Fund - Direct Plan-Growth, etc.

(Also read:  3 Small-cap Mutual Fund SIPs, Given Returns Upto 114.69% In 3 Years, Rated By Morningstar)

Disclaimer

Investing in equities/mutual funds/SIPs poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, and the author are not liable for any losses caused as a result of decisions based on the article.

(Data mentioned as on January 19, 2022)