HDFC Smallcap Fund, Quant Smallcap Fund, Franklin India Smaller Companies Fund: These have delivered up to 39% returns in just 1 year
Experts say small-caps appear to be even more attractive than mid-caps in the current scenario
- Sep 8, 2023,
- Updated Sep 8, 2023 1:24 PM IST
With the ongoing outperformance of the small-cap stocks, select small-cap mutual funds also managed to deliver robust returns to investors in the last one year. With a gain of 38.74 per cent, HDFC Smallcap Fund emerged the top gainer. It was followed by Quant Smallcap Fund (up 38.66 per cent) and Franklin India Smaller Companies Fund (up 37.82 per cent).
On the other hand, the BSE SmallCap index advanced 30 per cent to 38,101.21 on September 7 from 29,298.67 on the same day last year. The BSE MidCap index and BSE Sensex gained 25 per cent and 12 per cent, respectively.
Sharing his views on the broader market, Vinod Nair, Head of Research at Geojit Financial Services, said, “Valuation of mid- and small-caps remain appealing when compared to the trends of the past seven years. Specifically, small-caps appear to be even more attractive than mid-caps in the current scenario.”
“However, considering the overall market consolidation, it is not an ideal environment for investing in high-risk categories, leading to mixed opinions. India is now more of a stock-to-sector play. We anticipate that the category as a whole will outperform in the medium to long term. Although there has been strong performance in the short term by mid- and small-caps, sustaining this in the near term may pose a challenge,” Nair said.
Data further highlighted that Nippon India Small Cap Fund (up 36.92 per cent), Tata Smallcap Fund (up 32.40 per cent) and HSBC Small Cap Fund (up 32.20 per cent) also outperformed the BSE Smallcap index in the last one year. ABSL Nifty Smallcap 50 index and Axis Nifty Smallcap 50 Index also gained over 30 per cent each during the same period.
Asked which small-cap fund one should invest in, Rishiraj Maheshwari, Founder and CEO of RISCH Wealth & RISCH Family Office, said, “Kotak Small Cap Fund—which has exposure in chemical, machinery, building products, metals and mining, auto component, electrical equipment, household durable, pharma, textile and apparel—looks attractive at present. Investors can also consider Franklin India Smaller Companies Fund—which has exposure in banks, real estate management, software, consumer finance and construction. I also like Axis Small Cap Fund.”
“Whoever comes in for small-caps funds now should have long time horizons 5–10-year holdings and allocate funds as per their risk appetite and asset allocations. One should consider investing 5-9 per cent of overall allocations in small-caps,” Maheshwari said.
Also read: Mazagon Dock shares in news on signing MSRA with US government. Key details
With the ongoing outperformance of the small-cap stocks, select small-cap mutual funds also managed to deliver robust returns to investors in the last one year. With a gain of 38.74 per cent, HDFC Smallcap Fund emerged the top gainer. It was followed by Quant Smallcap Fund (up 38.66 per cent) and Franklin India Smaller Companies Fund (up 37.82 per cent).
On the other hand, the BSE SmallCap index advanced 30 per cent to 38,101.21 on September 7 from 29,298.67 on the same day last year. The BSE MidCap index and BSE Sensex gained 25 per cent and 12 per cent, respectively.
Sharing his views on the broader market, Vinod Nair, Head of Research at Geojit Financial Services, said, “Valuation of mid- and small-caps remain appealing when compared to the trends of the past seven years. Specifically, small-caps appear to be even more attractive than mid-caps in the current scenario.”
“However, considering the overall market consolidation, it is not an ideal environment for investing in high-risk categories, leading to mixed opinions. India is now more of a stock-to-sector play. We anticipate that the category as a whole will outperform in the medium to long term. Although there has been strong performance in the short term by mid- and small-caps, sustaining this in the near term may pose a challenge,” Nair said.
Data further highlighted that Nippon India Small Cap Fund (up 36.92 per cent), Tata Smallcap Fund (up 32.40 per cent) and HSBC Small Cap Fund (up 32.20 per cent) also outperformed the BSE Smallcap index in the last one year. ABSL Nifty Smallcap 50 index and Axis Nifty Smallcap 50 Index also gained over 30 per cent each during the same period.
Asked which small-cap fund one should invest in, Rishiraj Maheshwari, Founder and CEO of RISCH Wealth & RISCH Family Office, said, “Kotak Small Cap Fund—which has exposure in chemical, machinery, building products, metals and mining, auto component, electrical equipment, household durable, pharma, textile and apparel—looks attractive at present. Investors can also consider Franklin India Smaller Companies Fund—which has exposure in banks, real estate management, software, consumer finance and construction. I also like Axis Small Cap Fund.”
“Whoever comes in for small-caps funds now should have long time horizons 5–10-year holdings and allocate funds as per their risk appetite and asset allocations. One should consider investing 5-9 per cent of overall allocations in small-caps,” Maheshwari said.
Also read: Mazagon Dock shares in news on signing MSRA with US government. Key details