Best Performing Small Cap Funds

5 Best Small Cap Funds
5 Best Small Cap Funds

Mutual Funds
by 5paisa Research Team Last Updated: 2022-10-11T10:50:12+05:30

Before we let you know the best performing small cap funds let us highlight what exactly a small cap fund is. In the stock market, companies that are listed are split into 3 categories which are Small, Mid & Large Cap companies, and this division is made in accordance with their market capitalization. Like large-cap companies have a market cap of Rs 20,000 crore or more, mid-cap companies is between Rs 5,000 crore to Rs 20,000 crore and small-cap companies have a market cap of below Rs 5,000 crore.

Amongst this, Small Cap companies are a popular investment choice as they have the potential to eventually become the next big business! So now you may think, even in this category there are so many options and how do you choose the one? 

We have made this process easy for you by providing you with our research-backed top/best performing Small Cap Fund. Here is the list;

 

Top Small Cap Mutual Funds

Fund Name 3Y returns (As on Oct 10, 2022) Min SIP Amt  
1. Quant Small Cap Fund 54.96 % p.a. Rs.1,000/-  Invest Now
2. Canara Robeco Small Cap Fund 43.03 % p.a. Rs.1,000/-  Invest Now
3. Nippon India Small Cap Fund 38.09 % p.a. Rs.100/-  Invest Now
4. Tata Small Cap Fund 35.22 % p.a. Rs.150/-  Invest Now
5. SBI Small Cap Fund  33.16 % p.a. Rs.500/-  Invest Now

 

1. Quant Small Cap Fund 

Quant Small Cap Fund is an Equity Scheme launched by Quant Mutual Fund. Currently, this fund is managed by Mr. Sanjeev Sharma. It is one of the top-performing Small-cap fund on the list. The fund tracks the NIFTY’s Small Cap 250 Total Return Index & has a category average return of 29.32% p.a. in three years. Whereas, this fund has given a 3Y annualised return of 54.96%.

2. Canara Robeco Small Cap Fund 

A Equity Scheme launched by Canara Robeco Mutual Fund and managed by Mr. Shridatta Bhandwaldar. This fund has a category average returns of 29.32% p.a. over the last three years and tracks the NIFTY Small Cap Total Return Index. In contrast, this fund has  3-year annualised returns of 43.03%.

3. Nippon India Small Cap Fund

A Equity scheme launched by Nippon Mutual Fund and managed by Mr. Sameer Rachh. The fund tracks the NIFTY’s Small cap 250 Total Return Index & has a category returns of 29.32% p.a. in last three years. Whereas, this fund has given a 3Y annualised returns of 38.09%.

4. SBI Small Cap Fund 

A Equity Scheme was launched by SBI Mutual Fund and managed by Mr. R Srinivasan. This fund has a category average return of 29.18% p.a. over the last three years and tracks the NIFTY Small Cap Total Return Index. In contrast, this fund has 3-year annualised return of 33.16%.

5. Tata Small Cap Fund

A Equity Scheme launched by Tata Mutual Fund and managed by Mr. Chandraprakash Padiyar. The fund tracks the NIFTY’s Small Cap 250 Total Return Index & has a category average return of 29.18% p.a. in last three years. Whereas, this fund has given a 3Y annualised return of 35.22%.

Now let’s dive a little deeper to understand the ideas behind these top Small Cap Mutual Funds. Here, we'll examine what they are, how they can help you build your portfolio, and whether they're the best option for you;

 

More about Small Cap Mutual Funds?

We know this funds hold companies with a market capitalization of less than ₹5,000 Crores and hence they are termed as Small Cap Companies. In technical terms, a small cap mutual fund must contain at least 65% of small cap companies. As this have growing potential over the long run but they do carry risk and volatility compared to other equity oriented mutual funds. 

Hence, these Funds have been a popular option for investors because of their remarkable results over the previous years. Since Small Cap Funds are low priced, they allow you to benefit from any future upward movement, or from the expansion of their companies when selected wisely!

 

Should you invest in Small Cap Funds?

You can consider investing in Small Cap Funds if you’re willing to take some risks & multiply your wealth! As the underlying companies are new and want to grow quickly, they are more volatile than large & mid-sized companies. Hence, Small Cap Funds are best suited for moderate to aggressive investors who want to make the most of the market opportunities.

 

How do you pick the best Small-cap fund for yourself?

Like any other Mutual Fund, it is essential to consider all the variables that affect Fund’s performance when selecting the Best Small Cap Fund. This section will highlight some of the important factors that you should consider before investing;

1. Investment objective: If you want to get the most of your small-cap investments, you should invest in these for a long-term investment objective. For instance - paying your child’s higher education fee, setting aside funds for retirement, or purchasing a house.

2. Risks: One of the most important factor you should consider before investing is to evaluate whether you wish to play safe or are willing to take some risk. Also, if you have a high risk tolerance or moderate risk appetite you should invest in these funds. 

3. Returns: These funds can provide you with great returns, making them a great addition to your portfolio. With a sizeable degree of risk, these funds act as a portfolio buffer that give excellent value if things turn out well in the market.

4. Cost: Small-cap equity funds charge a fee in order to properly manage your investment. This is referred to as a fund's expense ratio. According to SEBI's criteria, a fund's expenditure ratio cannot exceed 2.50%.

 

Know the Tax treatment of these funds?

The time period of holding a Small Cap Mutual fund will determine the taxation of your funds when redeemed. Short-term capital gains (STCG), which have a holding period of up to one year, will be taxed at a rate of 15% plus cess. Whereas, Long-term capital gains (LTCG) with a holding period of more than one year, will be taxed at 10% plus cess. Not just that, All Long term Gains up to ₹1 Lakh in a year will be exempt from tax.

 

Wrapping it up

Investing in Top Small Cap Funds can pay off & help you diversify your portfolio if chosen wisely. By investing in their growth, it can give you an opportunity to discover the next big businesses & grow your wealth, simultaneously!
 

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About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Disclaimer

Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

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