Equity market in India witnessed a phenomenal surge over the past decade, with small cap mutual funds as standout performers. These funds delivered an impressive average return of 40.44% in 2023, and their momentum hasn’t slowed down.
In April 2024, small cap funds attracted a significant inflow of Rs. 2,208.70 crores. This trend continued in May 2024, with an even more impressive inflow of Rs. 2,724.67 crores.
June 2024 maintained this upward trend, with an inflow of Rs. 2,263.47 crores. This consistent inflow of funds shows investors’ confidence and demand for small cap funds among investors. Despite their high risk, these funds show no signs of losing their shine anytime soon.
Let’s delve into the exceptional fund in Small Cap Fund category that has generated the highest returns over the past10 years, the “Nippon India Small Cap Fund”.
Details of Nippon India Small Cap Fund
Nippon India Small Cap Fund is an open-ended equity scheme and is one of the largest funds among Small Cap mutual funds in terms of AUM and returns in the category. Fund is launched by Nippon India Mutual Fund AMC in September 2010.
Investment Objective of fund
The fund’s goal is to pick stocks that have high growth potential at attractive valuations.
Let’s have a quick glance at the details of the Fund:
Fund’s Portfolio Construction
Nippon India Small Cap Fund holds a large portfolio of 210 stocks, significantly higher than the category average of 82.71. The top 10 stocks account for around 11% of the fund’s assets.
The top allocation of funds is to small cap companies, accounting for 54.3% but its top holdings comprise a mix of large, mid and small cap stocks such as HDFC Bank, Tube Investments of India, Kirloskar Brothers, Voltamp Transformers, and Apar Industries.
Analyzing the risks and returns of fund
Nippon India Small Cap Fund is the top performer in the small cap category. It has generated the highest returns, beating all other funds in the category.
Let’s take a quick peek at the returns generated by the fund:
The returns mentioned above are as of July 29, 2024. The table highlights the fund’s exceptional performance across all periods, with its highest returns over the 3-year and 10-year periods being particularly remarkable.
It has consistently outperformed both its benchmark returns and the category average. However, Small cap funds are highly risky than large and mid-cap stocks, as they invest in companies with smaller market capitalization.
This makes them more unstable but also provides the potential for higher returns compared to large and mid-cap funds.
Meet the Fund Manager: Mr. Samir Rachh
The brain behind this impressive fund is MR. Samir Rachh, who has over 31 years of experience. Prior to joining Nippon India Mutual funds, he worked with Hinduja Finance, Emkay Research and Anvicon Research.
Who should invest in Nippon India Small Cap fund?
It is a high-risk high return fund. Hence, Investors who seek long term capital appreciation and are willing to take higher risks can choose Nippon India Small Cap fund. It is suitable for investors looking to invest for more than 5 years.
Always assess your risk appetite before investing.
