Investment in small-cap mutual funds pays off smarter over some time. Such companies usually tend to be much newer, with more scope for growth faster and relatively smaller in size than established firms. Though they can be very risky owing to market fluctuations, the possibility of high returns that arise makes them very attractive. A SIP calculator lets you plan your investment and picture how much you might earn with regularly invested money over time. Overall, small-cap mutual funds are an integral part of an investment strategy.
Know the best 5 small cap mutual funds to invest in for long-term growth
Investing in small-cap mutual funds is rewarding because the exposure to growing companies they provide allows growth. Five of the best small-cap mutual funds are as follows:
Quant Small Cap Fund Direct Plan Growth
It is a well-diversified fund, with the top 20 fund holdings accounting for about 62% of its total assets, implying that it spreads investment across different companies. Also, the expense ratio is 0.62%, which generally means the cost of managing this fund is relatively low. Since there is an exit load of 1% if your money is taken out within a year, this discourages early redemption and encourages longer-term investing.
Axis Small Cap Fund Direct Plan Growth
This has performed well for over nine years, winning conditions for its investors. This fund will focus more on quality small-cap companies with big exposures in Narayana Hrudalaya and Galaxy Surfactants. Moreover, it has an expense ratio of 0.54, among the lowest in its category. Thus, helping you retain more of your returns. Furthermore, Investors appreciate that there’s no lock-in period. This flexibility means you can withdraw your money if needed.
Nippon India Small Cap Fund Direct Growth
This includes 20 holdings and that represents only about the 30% of its overall investments. The sectors where the fund is invested include capital goods, chemicals, and financials, hence covering economic growth in both investment and consumption aspects. However, it has an expense ratio of 0.92%, slightly higher than other options, but it is a strong opportunity for long-term growth. This fund could be a good choice for those seeking diverse exposure.
Kotak Small Cap Fund Direct Growth
While its largest investment is in metals and mining, the Kotak Small Cap Fund is singular in focusing on the chemical sector. This mix allows for growth in different industries. An expense ratio of 0.59% is quite reasonable in cost. Like its peers, it has an exit load for redemptions within a year, a common feature among small-cap funds. Moreover, this encourages long-term investing, which is very important for maximizing returns.
SBI Small Cap Fund Direct Plan Growth
It accepts SIPs, and the minimum investment required is Rs. 500, hence quite affordable for a lot of investors. The expense ratio is relatively low at 0.70% compared to its peers within the category. However, the top holdings for this fund are TREPS and Triveni Turbine, which very well suggest that the portfolio is cloudy with growth stories. This fund can be a great option for those looking to start their investment journey with smaller amounts.
Final words
To sum up, the growth possibilities from small-cap mutual funds’ investments are huge, as most mutual funds include companies that have just emerged and are likely to grow. Conversely, the risks and volatility cannot be ignored either. The best small cap mutual funds are great avenues for diversification and capturing high returns over time. They outperform their larger peers over the long term and present unique opportunities to investors
