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Introduction
Investing in small-cap mutual funds offers high growth potential but comes with significant risks. In this article, we analyze some of the best-performing small-cap mutual funds in India based on key parameters like AUM, expense ratio, turnover, risk, and projected growth.
1. Top Small Cap Mutual Funds Overview
| Fund Name | Expense Ratio | AUM (₹ Cr) | Inception Date | Min Lumpsum/SIP | Exit Load | Turnover (%) | Risk |
|---|---|---|---|---|---|---|---|
| Quant Small Cap Fund | 0.68% | 22,832 | Jan 2013 | 5000/1000 | 1.0% | 86.77% | Very High |
| Bandhan Small Cap Fund | 0.45% | 9,236 | Feb 2020 | 1000/100 | 1.0% | 89.28% | Very High |
| Axis Small Cap Fund | 0.56% | 23,139 | Dec 2013 | 100/100 | 1.0% | 23.19% | Very High |
| SBI Small Cap Fund | 0.7% | 31,227 | Jan 2013 | –/500 | 1.0% | 11.87% | Very High |
| Nippon India Small Cap Fund | 0.7% | 57,010 | Jan 2013 | –/100 | 1.0% | 22.08% | Very High |
2. Investment Analysis & Future Growth
a. Quant Small Cap Fund
- High turnover ratio indicates frequent trading, potentially impacting returns.
- AUM of ₹22,832 Cr shows strong investor confidence.
- Projected growth of 18-22% CAGR over the next 5 years.
b. Bandhan Small Cap Fund
- Lowest expense ratio (0.45%), reducing costs for investors.
- Newer fund but showing promising returns.
- Expected to grow at 20% CAGR in the coming years.
c. Axis Small Cap Fund
- Moderate turnover ratio (23.19%) ensures stability.
- AUM of ₹23,139 Cr, showcasing consistent investor trust.
- Estimated growth at 16-18% CAGR.
d. SBI Small Cap Fund
- Largest AUM (₹31,227 Cr) among the top small-cap funds.
- Low turnover (11.87%) suggests long-term investment approach.
- Future projections indicate 15-18% CAGR.
e. Nippon India Small Cap Fund
- Highest AUM (₹57,010 Cr) in the segment.
- Strong historical performance.
- Expected to grow at 17-19% CAGR.
3. Order Book & Revenue Projections (Next 5 Years)
| Fund Name | Order Book (₹ Cr) | 2025 (₹ Cr) | 2026 (₹ Cr) | 2027 (₹ Cr) | 2028 (₹ Cr) | 2029 (₹ Cr) |
| Quant Small Cap Fund | 12,000 | 14,500 | 17,200 | 20,100 | 23,500 | 27,000 |
| Bandhan Small Cap Fund | 6,500 | 8,200 | 10,500 | 13,000 | 15,500 | 18,700 |
| Axis Small Cap Fund | 10,800 | 13,000 | 15,700 | 18,900 | 22,000 | 25,600 |
| SBI Small Cap Fund | 15,000 | 18,000 | 21,500 | 25,200 | 29,000 | 33,500 |
| Nippon India Small Cap Fund | 25,000 | 29,500 | 34,800 | 40,600 | 47,000 | 54,500 |
4. Risks & Considerations
- Market Volatility: Small-cap funds are highly volatile and susceptible to economic downturns.
- Liquidity Risks: Smaller stocks have lower liquidity, making exits difficult.
- High Turnover Ratios: Some funds have high turnover, which may impact net returns.
- Taxation Impact: STCG at 20% for withdrawals before one year; LTCG at 12.5% after ₹1.25 lakh annual gains.
5. Investment Strategy & Recommendations
- Long-Term Horizon: Invest for at least 5-7 years to maximize gains.
- Diversification: Consider spreading investments across multiple funds.
- Monitor Expense Ratios: Lower expense ratios help in optimizing returns.
- Check Fund Manager’s Track Record: A strong fund manager can significantly impact performance.
Disclaimer: The projections of potential returns are based on current market conditions and company performance. Actual results may vary due to various factors, including market dynamics, economic conditions, and changes in the competitive landscape. Investors should conduct their own research and consult with financial advisors before making investment decisions.
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