Navigating the small-cap mutual fund market in 2024 will need astute observation and calculated decision-making. Given the ever-changing nature of the market, investors look to small-cap funds, such as Quant small cap fund, which is renowned for offering high return possibilities, for growth and diversification prospects.
Here are the top five small-cap mutual funds that combine solid performance, seasoned management, and encouraging growth prospects.
What is a Small Cap Mutual Fund?
These funds invest a significant share of their investible corpus in equity or equity-related instruments. As per SEBI, these funds must invest 80% of their assets in small camp companies. These companies are ranked less than 250th in market capitalisation and less than INR 5000 crores in money terms.
However, investors must remember that these funds are high-risk, and a slight fluctuation in the market can lead to a significant impact on these small-cap fund companies’ share prices. It does not mean that these funds are not important; they offer substantial returns when compared with others.
2024’s Top 5 Small Cap Mutual Funds
Here are the top five small-cap mutual funds to invest in 2024:
| Fund Name | Crisil Rank | 1 year CAGR | 5 year CAGR | Fund Size |
| Quant Small Cap Fund | 4 | 73.95% | 37.88% | INR 17348.95 Cr |
| Axis Small Cap Fund | 3 | 44.12% | 29.41% | INR 19606.42 Cr |
| Tata Small cap Fund | 3 | 44.34% | 29.64% | INR 6289.22 Cr |
| Nippon Small Cap Fund | 5 | 55.72% | 28.49% | INR 45749.06 Cr |
| HSBC Small Cap Fund | 3 | 50.03% | 24.12% | INR 13401.24 Cr |
- Quant Small Cap Fund
- Fund Manager – Ankit Pande, Sanjeev Sharma, and Vasav Sahgal
- Expense Ratio – 0.7%
- Exit Load – NIL
- NAV – 245.57
- Axis Small Cap Fund
- Fund Manager – Vinayak Jayanath, Shreyash Devalkar, and Mayank Haryanki
- Expense Ratio – 1.64%
- Exit Load – NIL – 1%
- NAV – 101.64
- Tata Small Cap Fund
- Fund Manager – Chandraprakash Padiya and Jeetandra Khatri
- Expense Ratio – 0.3%
- Exit Load – NIL – 1%
- NAV – 37.68
- Nippon Small Cap Fund
- Fund Manager – Samir Rachh and Tejas Sheth
- Expense Ratio – 1.52%
- Exit Load – NIL – 1%
- NAV – 147.26
- HSBC Small Cap Fund
- Fund Manager – Venugopal Manghat, Cheenu Gupta, and Sonal Gupta
- Expense Ratio – 1.72%
- Exit Load – NIL – 1%
- NAV – 72.80
Who Should Invest in Small Cap Mutual Funds?
Small Cap Mutual funds are significant for the below-mentioned people:
- Investors currently in the market are searching for additional methods to diversify their holdings, and it is appropriate.
- Since these funds invest in smaller firm equities that have not yet seen growth, they have a significantly higher risk than mid-cap or large-cap funds. As a result, it may be appropriate for investors who can withstand rapid drops in the fund’s value or are prepared to assume some risk.
- While small-cap funds are noted for their strong long-term performance, they are susceptible to short-term volatility. Because of this, they are the best candidates to be long-term investors in the funds.
Benefits of Investing in Small Cap Mutual Funds
Even though these funds are categorised as high-risk, they offer their investors many benefits. Some of them are listed below:
- High growth potential –
These funds can provide significantly higher returns than mid- or large-cap funds. It is because of the strong growth potential of these small-cap companies.
- Portfolio diversification –
Small-cap mutual funds are the best way to diversify your portfolios. Portfolio diversification helps lower overall investment risks. At the same time, it protects you even when the market is going through a tough time.
- Access to emerging companies –
Large institutional investors frequently overlook small-cap firms, which allows for organic development. Small-cap stocks may be undervalued because they receive less attention from analysts and institutions, enabling fund managers to profit from investing in emerging companies.
Conclusion
Investors looking for growth potential in the ever-changing market may find attractive investment prospects in these top small-cap mutual funds in 2024. These funds have proven they can provide value to investors by combining good performance, seasoned management, and tactical placement.
However, before making any investment selections, conducting in-depth research and considering unique financial objectives and risk tolerance is crucial. Investors may take advantage of small-cap funds’ potential to help them reach their long-term financial goals by being proactive and well-informed.
