HDFC Small Cap Fund: Undergoing a major transition, improving but too soon to tell

ET Wealth collaborates with Value Research to analyse top mutual funds. We examine the key fundamentals of the fund, its portfolio and performance to help you make an informed investment decision.

HOW HAS THE FUND PERFORMED?
With a 7-year return of 12.6%, the fund has underperformed the category (average return 16.4%), but has outperformed the benchmark (8.08%).

Growth of Rs 10,000 vis-a-vis category and benchmark

The fund’s long term track record is not very healthy.

Annualised performance (%)

The fund has struggled to keep up with peers over past 3 and 5 years.

Yearly performance (%)

The fund’s performance has improved only recently, after years of underperformance.

BASIC FACTS
Date of launch: 4 March 2008 Category: Equity
Type: Small Cap
Average AUM: Rs 969.02 cr
Benchmark: Nifty Smallcap 100 Index
WHAT IT COSTS
NAVS*
Growth option: Rs 29
Dividend option: Rs 21
Minimum investment: Rs 5,000
Minimum SIP amount: Rs 500
Expense ratio^ (%): 2.57
Exit load: 1% for redemption within 365 days

*As on 6 Dec 2016
^As on 30 Sep 2016

FUND MANAGERS
Chirag Setalvad and Rakesh Vyas
Tenure: 2 years and 5 months
Education: B.Sc and MBA /B.E and PGDM



SHOULD YOU BUY?
This fund has been in a transition phase since being acquired from the stables of the erstwhile Morgan Stanley Mutual Fund. Named ‘Morgan Stanley ACE Fund’ (Across Capitalisations Equity) in its earlier avatar, the fund has since changed its name from HDFC Small and Midcap Fund to HDFC Small Cap Fund. The fund’s strategy has also seen a shift since being taken over by the current fund manager, and has a heavy tilt towards smaller companies, as evidenced by much lower average market capitalisation of its portfolio. Its performance has improved to an extent recently, but it is too short a period to analyse the return profile. However, the fund manager’s proven execution capabilities in the mid and small cap segment bodes well for this fund.