With up to 36% average return since last Diwali, this Bandhan fund tops smallcap MF returns chart

Smallcap mutual funds have offered an average return of around 36.31% since the last Diwali in November 2023. Around 26 small cap funds have been there in the market in the said period.

Bandhan Small Cap Fund, the topper in the category, offered 60.36% return since the last Diwali. LIC MF Small Cap Fund gave 45.02% return in the same period, followed byITI Small Cap Fund which gave 44.94% return in the same horizon.



Tata Small Cap Fund and Quant Small Cap Fund gave 43.45% and 43.25% returns respectively since November 2023. Nippon India Small Cap Fund, the largest small cap fund, gave 40% return in the mentioned period.

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Canara Rob Small Cap Fund and SBI Small Cap Fund offered 34.48% and 34.38% returns respectively. Franklin India Smaller Companies Fund delivered 34.34% return in the said period.

HDFC Small Cap Fund delivered 28.99% return since November 12, 2023. Union Small Cap Fund and Quantum Small Cap Fund delivered 25.18% and 20.08% returns respectively in the same period.

After looking at the performance of small cap funds since last Diwali, are you looking to make an investment in these funds? Will they continue to perform in similar fashion?

“We believe that small caps still make sense to include in a portfolio, particularly for investors with a three to five year time horizon. Small caps don't have froth created as mid-caps do, and because they have a longer tail list of scrips than mid-caps, which only have 150 equities, fund managers have more options,” said Amar Ranu ,Head-Investment Products & Insights, Anand Rathi Shares and Stock Brokers.

“Additionally, as business models in many sectors undergo massive shifts, technology-led disruptions are driving the growth of numerous small businesses operating in specialized markets. Going forward, small-cap profits growth is anticipated to be between 20 and 22 percent,” he added.

Since last Diwali, two new small cap funds have been launched. Motilal Oswal Small Cap Fund, JM Small Cap Fund have been launched and TRUSTMF Small Cap Fund is still under its NFO period.

The small cap schemes are benchmarked against Nifty Smallcap 250 - TRI and BSE 250 Small Cap - TRI which gained 38.20% and 38.24% respectively since the last Diwali.

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“Since there is a lot of room to generate significant wealth in small caps, especially when there are a lot of startups or businesses that are up for listing, the recent correction of around 7% in small caps makes it even more advantageous to allocate. Nonetheless, one must exercise caution while allocating assets and adhere to the asset allocation based on their risk tolerance,” recommended Amar Ranu.

Small cap schemes invest in very small companies or their stocks. That is why investing in small cap stocks is considered extremely risky. The small cap segment can be extremely volatile in the short term, but they have the potential to offer very high returns over a long period. Small cap schemes are recommended only to aggressive investors with a high-risk appetite and long investment horizon, say, around seven to 10 years. ETMutualFunds do not recommend small cap schemes to new and inexperienced investors.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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