Reliance small cap fund is an open-ended equity mutual fund scheme provided by Reliance Mutual Fund that primarily invests in equities and equity-linked securities of companies that have a small market capitalization. As a result of investing in smaller companies, the investments made into the fund offer the possibility of higher returns in lieu of a much higher risk as compared to mid and large cap focused funds.
About Small Cap Mutual Funds
Small cap is short for small capitalization i.e. smaller companies that lie at the lower end of market capitalisation. Small cap mutual funds primarily invest in smaller companies with lower revenues and a smaller base of clients. Such companies can include but are not limited to start-ups and companies in the initial phases of growth. As a result of investing in the equity of companies that are in their initial growth phase, small cap mutual funds such as Reliance Small Cap Fund have a high potential for growth. Simultaneously as many small cap companies are start-ups there is a higher risk that these companies may not be able to continue in business for the foreseeable future.
The primary objective of the Reliance Small Cap fund is the generation of capital appreciation for the investor in the long term through investments made in equity and equity-linked instruments of companies that have a relatively small market capitalisation i.e. small cap companies. Reliance AMC also mentions a secondary objective in its offer document that involves the generation of consistent returns through investments made in money market as well as debt securities. However, Reliance AMC does not guarantee that both or either of these fund objectives will be met.
Fund Information and Statistics
Launch Date: This small cap mutual fund was opened for subscription by Reliance AMC on the 16th September 2010.
Fund Type: Reliance Small Cap Fund is an open ended fund hence any investor can choose to invest in the fund or exit from it at their own convenience.
Minimum Investment: The minimum lump sum investment in the Reliance Small Cap fund is Rs. 5000, thereafter, investment can be made in multiples of Rs. 1.
Risk Category: Reliance Small Cap Fund is classified as a moderately high risk investment with potentially high returns. However being market-linked, the future performance of the plan cannot be predicted.
Returns since launch: Since the time of launch, Reliance Small Cap Fund has provided high returns of 20.30%, which places it far ahead of the growth observed by the S&P BSE Small Cap benchmark.
Exit Load: The investor is liable to pay an exit load of 1% charged on the total investment amount liquidated in case redemption/switch of units bought occurs before completion of 365 days from the time of initial investment.
Exit Load Criteria: If the investor exits the scheme by switching or liquidating his/her investment in the Reliance Small Cap Fund before completion of 1 year from the date of initial investment, he/she is liable to pay an exit load of 1% on the total investment liquidated.
Fund Manager: The Reliance Small Cap mutual fund is managed by Mr. Sunil Singhania, a Narsee Monjee graduate, who has been tracking as well as managing mutual funds for a period exceeding 20 years. His is focused on managing his mutual fund such that they provide the dual advantage of being smart investments and providing significantly high returns.
Plans and Options Available with Reliance Small Cap Fund
Direct Plans: In case of direct plans, the investor invests directly with Reliance Nippon AMC hence there are no additional charges in terms of brokerage or portfolio handling fees. However, in case of direct plans, the NAVs are higher than regular plans and so are the returns due to the lower management costs. Available variants of the direct plan include Growth, Dividend and Bonus options.
Regular Plans: This is the Reliance Small Cap option an individual investor can opt into in case the investment is being made through a broker. There may be some charges involved in these cases which may be portfolio management fees and/or brokerage charges. However, in case you invest through Paisabazaar.com, you do not have to pay any brokerage or portfolio management fees. Available options of regular plans include growth, dividend and bonus. Regular plans have a lower NAV than direct plans however they yield lower returns on average due to higher fund management costs.
Institutional Plans: This option is available only to institutional investors who are seeking to diversify their investment portfolio. This plan is in contrast to the regular or direct plans that an individual investor can invest in. Institutional plans also offer options such as growth, dividend and bonus to the investor group.
Lumpsum/SIP Investments: Like any other mutual fund investment, the investor has the option of either investing in Reliance Small Cap Fund as a lumpsum or through an SIP. This option is available only to individual investors.
Investing in Reliance Small Cap Fund
Any individual investor who has completed 18 years of age and can complete the KYC requirements as mandated by SEBI is eligible to invest in the Reliance Small Cap Fund. Additionally, institutional investors seeking to make diversified investments can also purchase units of the mutual fund provided they qualify for the applicable criteria. Foreign individual investment is not permitted in this scheme.
The investments made by the fund manager of Reliance Small Cap Fund are made with the following aims in mind:
- To generate superior returns adjusted for risk by focusing on small cap companies.
- Small cap companies will include those who have the smallest market capitalisation among the companies featured in the S&P BSE Small Cap funds.
- The focus on small cap companies is designed to get invested into future mid cap companies at reasonable values.
- The focus of the fund is on identification of emerging businesses that feature rational valuation, quality management and reasonable size.
- The style of investment is designed to adopt an approach based on prudent risk management by use of techniques including sector/stock diversification and margin of safety. This ensures the balance between high-growth with well-managed risk.
Top Holdings of Reliance Small Cap Fund
In an effort to ensure that the mutual fund balances the risk of small cap investments, the fund manager has targeted a diversified portfolio across multiples sectors and even in multiple companies in the same segment. The following are some of the key sectors and companies that Reliance Small Cap Fund is invested in*:
|Investment Sector||Top Holdings|
|Industrial Capital Goods||West Coast Pap, Honda Siel, Kirloskar Bros., LG Balakrishnan, etc.|
|Banking/Financial Sector||RBL Bank, GIC Housing Finance, HDFC Bank, Federal Bank, Yes Bank, etc.|
|Chemicals||Navin Fluoride, Atul, Seya Industries, Deepak Nitrite, Sharda Corp., INEOS Styro, etc.|
|Consumer FMCG||Radico Khaitan, United Breweries, Agro Tech Foods, Tata Coffee, etc.|
|Industrial Products||Bharat Electricals, Kalpataru Power, Voltamp Trans, etc.|
|Consumer Durables||Polyplex Corp., Bajaj Electric, etc.|
|Cement||Ashoka Buildcon, J. K. Cement , India Cements, Orient Cements, Hind Construction, etc.|
|Textile Products||Siyaram Silk, Greaves Cotton, etc.|
|Pharmaceuticals||Biocon, FDC, Advanced Enzyme, Claris Life, etc.|
|Software||Vindhya Telelin, NIIT, Sterlite Techno, Cyient, Honeywell Automation, Intellect Design, etc.|
|Manufacturing||VIP Industries, Arvind, Genus Power, etc.|
|Others||JagranPrakashan, Orient Paper, Century, PVR, Navkar Corp., etc.|
The list is indicative and subject to change as per market conditions and fund objectives.
How to Invest in Reliance Small Cap Fund through Paisabazaar.com
An individual investor can invest in Reliance Small Cap Fund through either the offline route or the online route. In case of the online investment option, the prospective investor can easily log on to their Paisabazaar.com investment account and choose the Reliance Small Cap Fund from the long list of equity funds that are currently available from Reliance AMC as well as other asset management companies.
You have the option of investing in either the growth or the dividend option, while also having the opportunity to start an SIP or make a lump sum investment in the scheme subject to the relevant terms and conditions. When investing in Reliance Small Cap Fund through the Paisabazaar.com platform you have the option of either purchasing through an ECS mandate for future scheduled SIP purchases or through netbanking of a bank of your choice. In either case, you do not have to pay any brokerages and you can compare your fund with other available funds before investing. Alternately, an individual investor could also invest in direct plans by logging on to the Reliance Nippon Mutual Funds website, complete the e-KYC verification using Aadhar and PAN card and subsequently, the investor can make the payment using a debit card or Netbanking/ ECS mandate.
In case of offline investment, the investor can choose to invest through a broker or go directly with Reliance AMC, fill out the subscription form and subsequently, provide post dated cheques to complete the transaction. Unlike online investment, where the investor can time the market by investing before the cut off time on a specific day, the offline mode provides less control to the investor.