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Business News/ Mutual Funds / Top mutual funds: These 9 small cap schemes delivered over 25% annualised returns in the past 10 years
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Top mutual funds: These 9 small cap schemes delivered over 25% annualised returns in the past 10 years

Small cap mutual funds are equity schemes, which invest a minimum of 65 percent of their assets in small cap stocks

There are 27 small cap mutual funds with total assets under management (AUM) amounting to ₹2.66 lakh crore Premium
There are 27 small cap mutual funds with total assets under management (AUM) amounting to 2.66 lakh crore

At the time of investing in a mutual fund, investors tend to examine the historical returns delivered by the scheme and compare it to other funds in the same category.

Although there are other factors also which make a scheme “investment worthy", investors still base their decision on the scheme’s historical returns vis-à-vis other factors.

Here, we shed light on small cap mutual funds, which have given higher annualised returns than 25 percent in the past 10 years.

At the outset, let us first understand what is a small cap mutual fund.

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Small cap fund

These are equity mutual funds which invest a minimum of 65 percent of their assets in small cap stocks. And small cap stocks are securities of companies, which are ranked below 250 companies when measured in terms of their market capitalisation.

Now, we list out the small cap funds which have delivered more than 30 percent in annualised returns for the past 10 years.

There are 27 small cap mutual funds with total assets under management (AUM) amounting to 2.66 lakh crore. These schemes received an inflow of 2,208 crore in April alone, higher than the corresponding inflow to mid-cap ( 1,793 crore) and large cap schemes ( 357.56 crore).

Small Cap Mutual Funds                         10-year-returns (%)
Quant Small Cap Fund                            39.06
Bank of India Small Cap Fund                     31.68
Nippon India Small Cap Fund                        30.88
Edelweiss Small Cap Fund                            28.50
Canara Robeco Small Cap Fund                  27.76
Kotak Small Cap Fund                                 27.38
Axis Small Cap Fund                                  26.41
ICICI Prudential Smallcap Fund              26.24
Invesco India Smallcap Fund                        26.87

(Source: AMFI; Returns as on May 9, 2024)

As we can see in the table above, the top-performing small cap fund (Quant Small Cap) has delivered 39.06 percent annualised return in the past 10 years. This is followed by Bank of India Small Cap Fund (31.68%), Nippon India Small Cap Fund (30.88%) and Edelweiss Small Cap Fund (28.50%).

ALSO READ | Large caps get attention amid uncertainty but don't ignore mid and small caps 

However, it is perhaps vital to mention that the historical returns – despite being an important metric of mutual fund scheme – do not guarantee future returns.

Additionally, small caps are seen as riskier investments when compared to large cap funds and blue chip investments. Capital markets regulator Sebi voiced apprehensions regarding the lofty valuations of small-cap and mid-cap stocks, telling money managers to restrict inflows into these schemes. 

READ HERE | Mutual funds stress test: Small cap funds' liquidity improves, albeit slightly

Following this, the regulator has kicked off monthly stress tests in the wake of concerns about market bubbles. Now all mutual funds are supposed to release monthly data to indicate the number of days it would take to liquidate its small cap and mid cap portfolio.

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.

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Published: 10 May 2024, 07:35 PM IST
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