A Small Cap Fund is a type of equity fund which invests a majority of its assets in the stocks of small cap companies (companies which rank 251st and more in terms of market capitalisation). Nearly 95% of all Indian listed companies are small cap companies.
Small cap funds are suitable for investors who are willing to take a relatively higher amount of risk for potentially high returns.
|Fund Name||1 Year Return||3 Year Return||5 Year Return|
|Axis Small Cap Fund||0.73%||13.25%||19.54%|
|Franklin India Smaller Companies Fund||0.63%||4.20%||10.14%|
|HDFC Small Cap Fund||0.92%||20.97%||19.82%|
|L&T Emerging Businesses Fund||-3.36%||9.23%||14.35%|
|Reliance Small Cap Fund||-6.99%||18.37%||24.63%|
Data as on March 31, 2019; Source: Value Research
1. Axis Small Cap Fund
Axis Small Cap Fund is a well-performing small cap fund which was launched in November, 2013. The scheme has demonstrated an attractive performance over both the short term and long term periods. It is a relatively aggressive fund which has no exposure to the large caps. The scheme has maintained its aggressive stance in the sector-wise allocation of funds also as it has given a higher weightage to consumption-driven sectors, such as Chemicals and Industrial Manufacturing than defensive sectors in its portfolio.
2. Franklin India Smaller Companies Fund
Franklin India Smaller Companies Fund is a veteran of the category which has been present in the space since January 2006. The scheme features an extraordinary performance record as depicted in the above graph. The scheme follows a balanced approach in allocation of its assets. It has adopted a relatively conservative approach while allocating its assets across market capitalisations (15% in large caps) and an aggressive approach while allocating them across sectors (more of cyclical sectors).
3. HDFC Small Cap Fund
HDFC Small Cap Fund is a time-tested fund which has been there in the category for over a decade now. It is a relatively aggressive small cap fund which holds just 6% of its assets in large caps. As far as the sector-wise allocation is concerned, the scheme is slightly more bullish on consumption-driven sectors than defensive sectors like pharmaceuticals. The aggressive approach of the scheme gives it the potential to earn high returns for relatively high risk.
4. L&T Emerging Businesses Fund
L&T Emerging Businesses Fund is a relatively recent addition to the small cap category but has succeeded in acquiring a position in the list of best small cap funds for 2019 owing to its extraordinary performance. The scheme, which was launched in May 2014, is an aggressive small cap fund which has invested more than half of its assets in small caps and almost the entire balance in mid caps. The scheme is aggressive in sector-wise allocation of its funds as well as it has given a higher weightage to cyclical sectors in its portfolio than defensive sectors.
5. Reliance Small Cap Fund
Reliance Small Cap Fund is a relatively conservative small cap fund, which opened for continous subscription in September 2010 and has given a weightage of 10% to large caps in its portfolio.The scheme has balanced off its conservative stance by holding around more than 50% of its assets in the stocks of consumption-dependent sectors like Consumer Durables and Industrial Capital Goods. It is an ideal scheme for long-term capital growth.