Synopsis: This article lists the top 5 small-cap mutual funds with the highest CAGR over the last 5 years. The article also covers what small-cap mutual funds are and who should consider investing in these funds.
Small-cap mutual funds invest in the stocks of companies that are ranked after the top 250 listed companies in the market. According to SEBI guidelines, all small-cap mutual funds should invest at least 65% of their total assets in small-cap stocks.
How We Selected These Funds
Methodology: We began by screening equity small-cap mutual funds using the Groww mutual fund screener. Funds were filtered based on the highest 5-year CAGR, and the top five performers were selected for the analysis. All data is based on the latest available period and has been sourced from Groww for comparative and educational purposes only.
Top 5 Funds (Detailed Analysis)
1. Quant Small Cap Fund (5-Year CAGR: 26.36%)
- NAV: ₹265.13
- AUM: ₹27,384.03Cr
- Expense Ratio:0.80%
- Exit load: 1% if redeemed within a year
Performance Snapshot
- 3-Year CAGR: 20.60%
- 5-Year CAGR: 26.36%
- 3-Year Absolute Return: 74.8%
- 5-Year Absolute Return: 229.2%
Quant Small Cap Fund uses NIFTY Smallcap 250 TRI as its benchmark fund and is managed by Sanjeev Sharma and Sandeep Tandon. Its top 3 holdings include Reliance Industries, JIO Financial Services, and RBL Bank. Its Alpha is 1.41, and Sharpe is 0.72. The portfolio is allocated in such a way that 98.27% is invested in equity assets, 5.48% is in debt, and -3.75% is in cash.
2. Bandhan Small Cap Fund (5-Year CAGR:25.04%)
- NAV: ₹50.68
- AUM: ₹19,266.54Cr
- Expense Ratio:0.47%
- Exit load: 1% if redeemed within a year
Performance Snapshot:
- 3-Year CAGR: 32.05%
- 5-Year CAGR:25.04%
- 3-Year Absolute Return: 128.9%
- 5-Year Absolute Return: 208.2%
Bandhan Small Cap Fund uses BSE Smallcap 250 TRI as its benchmark fund and is managed by Manish Gunwani and Kirthi Jain. Its top 3 holdings include Sobha Ltd, REC Ltd, and LT Foods. Its Alpha is 10.34, and Sharpe is 1.22. The portfolio is allocated in such a way that 91.11% is invested in equity assets, 8.83% is in cash, and 0.06% is invested in cash.
3. Nippon India Small Cap Fund (5-Year CAGR:24.61%)
- NAV: ₹185.11
- AUM: ₹65,812.16Cr
- Expense Ratio:0.65%
- Exit load: 1% if redeemed within a year
Performance Snapshot:
- 3-Year CAGR: 22.09%
- 5-Year CAGR:24.61%
- 3-Year Absolute Return: 81.7%
- 5-Year Absolute Return:203.2 %
Nippon India Small Cap Fund uses NIFTY Smallcap 250 TRI as its benchmark fund and is managed by Samir Rachh, Divya Dutt Sharma, and Lokesh Maru. Its top 3 holdings include Multi-Commodity Exchange of India, HDFC Bank, and SBI Ltd. Its Alpha is -0.55, and Sharpe is 0.62. The portfolio is allocated in such a way that 96.35% is invested in equity assets, and 3.65% is in cash.
4. Invesco India Small Cap Fund (5-Year CAGR:24.16%)
- NAV: ₹46.89
- AUM: ₹9,008.55Cr
- Expense Ratio:0.40%
- Exit load:
Performance Snapshot:
- 3-Year CAGR: 26.71%
- 5-Year CAGR:24.16%
- 3-Year Absolute Return: 102.2%
- 5-Year Absolute Return: 193.7%
Invesco India Small Cap Fund uses BSE Smallcap 250 TRI as its benchmark fund and is managed by Taher Badshah and Aditya Khemani. Its top 3 holdings include Sai Life Sciences, Krishna Institute of Medical Sciences, and Amber Enterprises. Its Alpha is 6.16, and Sharpe is 1.00. The portfolio is allocated in such a way that 99.40% is invested in equity assets, and 0.60% is in cash.
5. HSBC Small Cap Fund (5-Year CAGR: 22.50%)
- NAV: ₹85.16
- AUM: ₹15,028.86Cr
- Expense Ratio:0.70%
- Exit load: 1 % charged on units in excess of 10% of the investment, if redeemed within a year
Performance Snapshot:
- 3-Year CAGR: 18.36%
- 5-Year CAGR: 22.50%
- 3-Year Absolute Return: 64.4%
- 5-Year Absolute Return: 177.6%
HSBC Small Cap Fund uses NIFTY Smallcap 250 TRI as its benchmark fund and is managed by Venugopal Manghat and Mayank Chaturvedi. Its top 3 holdings include Multi-Commodity Exchange of India, Karur Vysya Bank, and eClerx Services. Its Alpha is -0.55, and Sharpe is 0.62. The portfolio is allocated in such a way that 96.35% is invested in equity assets, and 3.65% is in cash.
Performance Comparison Table
Who Should Consider These Funds?
Since these funds invest in small-cap companies, they are more prone to market volatility than the large or mid-cap funds. Therefore, these funds are ideal for investors who are willing to take higher risks for higher returns and stay invested for 7-10 years. Investors who want benefits from rupee cost averaging during market cycles should consider these funds.
Conclusion
Investors should not rely solely on past performance when selecting funds, but also consider factors such as expense ratio, portfolio allocation, AUM, NAV, etc and see if the investment strategy of the fund aligns with your financial goals.
Disclaimer: The information provided in this article is for educational purposes only and should not be construed as financial advice or investment recommendation. Returns mentioned are based on historical performance and may not be sustained in the future. Mutual fund investments are subject to market risks, including potential loss of capital. Investors are advised to assess their risk appetite, financial goals, and consult a certified financial advisor before investing.
Written by Nila Maria Jacob
