Introduction

Welcome to the definitive guide to Small Cap Mutual Funds investing in 2024. In this comprehensive analysis, We uncover the top-performing Small Cap Funds renowned for their stellar performance, robust management teams, and strategic risk management. Join us as we explore the top five funds that offer exceptional growth potential and delve into key insights to empower you to make informed investment decisions. Whether you’re a seasoned investor or new to mutual funds, this guide will you with the knowledge and strategies necessary to navigate the dynamic small-cap market landscape.

Top 5 Best Performing Small Cap Mutual Fund Scheme

HDFC Small Cap Fund

After being launched on 02.04.2008, HDFC Small Cap Fund has consistently outperformed the S&P BSE 250 Small Cap TRI, which is encouraging.

With a one-year return of 21.44% and a three-year return of 77.79%, the fund has proven its capacity to deliver strong results, suggesting it has successfully stood market volatility.

The fund’s AUM as of October 2023 was Rs.23183 Crore, which makes it the second-largest scheme in the Small Cap Fund category.

Mr Chirag Setalvad manages the HDFC Small Cap Fund renowned for his strong belief in long-term investments.

HSBC Small Cap Fund

Launched on May 12, 2014, the HSBC Small Cap Fund currently has an AUM of Rs.14619.42 Crores.

Over the past three years, this scheme has delivered an impressive return of 23.09%, significantly outperforming the benchmark’s 0.15%.

The fund has maintained a steady performance with a three-year consistency score of 72.41%.

Over five years, the fund achieved a 14.75% return, outperforming the benchmark’s 9.55%. The overall consistency score of 74.08% means the fund has maintained a stable track record.

Experienced fund manager Mr Venugopal Manghat Has managed this scheme since 2019 and thus it can potentially continue to do well under his supervision.

Nippon India Small Cap Fund

Having an AUM of Rs.50422.78 Crores, Nippon India Small Cap Fund makes it the largest Top scheme in its category.

Since its launch on September 5, 2010, it has returned an amazing 26.58%, surpassing the NIFTY Small Cap 250 TRI benchmark of 18.51%. This outstanding performance shows the fund’s wise investment selections and effective management. Over five years, the fund has returned an impressive 21.12%, greatly above the benchmark’s 12.89%. This consistent outperformance reveals the fund’s capacity to deliver sustainable growth, making it an appealing option for long-term investors.

Quant Small Fund

Established on November 24, 1996, Quant Small Cap Fund is well-known for its momentum-driven investing techniques. It takes an aggressive investment style and looks for investments with good growth possibilities. Over three years, this fund has generated an exceptional 44% return, outperforming the Nifty Small Cap 250 TRI benchmark’s 24% return. This outstanding result shows smart investment choices and efficient administration. The fund outperformed the benchmark with a strong five-year return of 29.05%, compared to 15.26%. Its continuous expansion is shown by its outperformance.

Mr Chirag Mehta has more than 19 years of experience and is quick in his strategy by adjusting allocation between market cap and sectors. This has made the scheme generate high returns for its investors.

Canara Robeco Small Cap Fund

Canara Robeco Small Cap Fund was launched on February 5, 2019. With a standing AUM of Rs.10085.98 Crores, this fund has done well, giving back 38.27% in three years, beating the Nifty Small Cap 250 TRI benchmark.

It’s been super consistent, scoring a perfect 100%, showing it gives stable returns. Over five years, it made 28.44%, consistently beating the benchmark, showing it’s a reliable scheme for investment. With a perfect score over five years, it’s a safe bet for steady returns, making it a good pick for those wanting to grow their money steadily.

Mr Pranav Gokhale has managed this fund with exceptionally great efficiency. His 12 years of expertise in the Mutual Fund industry has given investors, confidence in its ability to deliver stable returns over the long term.

Points to Remember in Small Cap Funds

The following factors are important to take note of while investing in the small-cap category:

Maintain a Long-Term Horizon

Investors should commit to a long-term investment horizon of at least 5 years when considering small-cap investments. These companies often require time to realize their growth potential, and short-term fluctuations can be significant.

Assess Your Risk Tolerance

Evaluate your risk tolerance before investing in small-cap stocks, as they tend to exhibit higher volatility compared to large-cap stocks. Be prepared for fluctuations in the value of your investments.

Diversify Your Portfolio

Ensure diversification across different companies and sectors by investing in multiple small funds or including small-cap funds as part of a broader portfolio that encompasses large and mid-cap funds.

Evaluate Fund Manager Expertise

Assess the expertise and track record of the fund manager. Look for experienced managers who have demonstrated success in managing small-cap funds.

Consider Fund Size

Take into account the size of the fund’s assets under management (AUM). Larger funds may offer stability, while smaller funds may have more flexibility to pursue promising opportunities.

Review Portfolio Composition

Examine the composition of the fund’s portfolio to ensure it aligns with your investment goals and risk tolerance. Seek funds with diversified portfolios across different sectors.

Analyse Performance Metrics

Evaluate the fund’s performance metrics, including historical returns, volatility, and consistency. Look for funds that have consistently performed well over multiple market cycles.

Watch Expense Ratio

Pay attention to the fund’s expense ratio, which represents the annual fees and expenses charged by the fund. Lower expense ratios can have a positive impact on long-term returns.

Establish an Exit Strategy

Develop a clear exit strategy. Determine when to exit if the investment thesis changes or if the fund no longer meets your investment objectives.

Stay Informed

Stay updated on market trends, economic conditions, and company-specific developments that may affect small stocks. Regularly review your investment portfolio and make adjustments as necessary to stay on track with your financial objectives.

Conclusion

We have identified the five best small-cap funds for 2024. Considering the inherent risks of small-cap investments, adopt the Systematic Investment Plan method. SIP allows you to invest regularly over time, reducing risk and potentially enhancing returns. Use these insights to navigate the small market successfully and invest wisely.