Top small-cap funds giving higher dividend yields

5paisa Research Team

Last Updated: 11th December 2022 - 12:44 am

Small-Cap funds have been consistently outperforming large-cap funds. In this article, we have listed top small-cap funds generating higher dividend yields.

Nifty Small-Cap 100 index has been witnessing a great rally since June 2022. After staring at a fall of almost 34%, Nifty Small-Cap 100 index jumped around 27% in last three months.

Studies around the globe suggest that in order to recover, it takes twice the time it took to fall. In the case of Nifty Small-Cap 100 index, the fall began in January 2022 and lasted up to June 2022. This means the index fell for six months.

Going by the assumption that it would take twice the time to recover, the index still has a lot of room to grow. In fact, the trend reversal also has been witnessed in the Nifty Small-Cap 100 index. Although there are dark clouds hovering around, a good risk-reward ratio makes small-cap attractive.

Category (excl. Sectoral & Thematic Funds	3-Month Median Returns (%)
Mid-Cap Funds	15.10
Small-Cap Funds	14.23
Multi-Cap Funds	12.15
Large & Mid-Cap Funds	12.14
Value/Contra Funds	11.53
Flexi-Cap Funds	11.39
Index Funds	10.48
Large-Cap Funds	9.73
International Funds	-1.02

The above table clearly shows that in the last three months, small-cap funds have outperformed most of the broader categories (excluding sectoral and thematic funds). The small-cap category generated a 3-month median return of 14.3%, whereas large-cap funds generated median returns of 9.73% in the same period.

Having said that, who doesn’t like to have a good regular income? In mutual funds, there are two ways in which you can get a regular income – dividends and a systematic withdrawal plan (SWP).

Even though, they serve the same purpose, both works differently. In the case of dividends, the income cannot be deemed to be fixed as it is at the discretion of the fund to pay the dividend or not. For SWP, the income is fixed and irrespective of the performance of the fund, the requisite units are redeemed.

In this article, we have curated a list of top small-cap funds earning higher dividend yields in the last one year.

Top Small-Cap Funds earning a higher dividend yield (Period: September 12, 2021, to September 12, 2022)
Scheme Name	Launch Date	Trailing 1-year Annual Dividend Yield - Distribution Yield (%)
DSP Small-Cap Fund	01-08-2010	10.8
HDFC Small-Cap Fund	03-04-2008	10.5
Franklin India Smaller Companies Fund	13-01-2006	8.6
ICICI Prudential Small-Cap Fund	18-10-2007	8.6
Source: Advisorkhoj

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