Do you want to add high-growth prospects to your investing portfolio? Your key to maybe better returns may lie in small-cap mutual funds. These funds make investments in smaller, promising businesses that have a lot of room to develop but are frequently overlooked by larger investors. Let’s look at five exceptional small-cap mutual funds that have performed well and could be worthwhile for your financial endeavors. These small cap mutual funds are ideal choices for both inexperienced and seasoned investors because they are readily available through the majority of mutual fund applications.
1. Quant Small Cap Fund: The Undisputed Performance Champion
With an impressive 5-year CAGR of 42.89%, the Quant Small Cap Fund is clearly the category leader. The exceptional Assets Under Management (AUM) of ₹26,670.21 crore is the outcome of significant investor interest in this amazing growth rate. The fund’s steady performance makes it an appealing option for growth-oriented investors looking for significant returns, even with its somewhat higher cost ratio of 0.65%.
2. Nippon India Small Cap Fund: The Heavyweight Contender
Nippon India Small Cap Fund has undoubtedly gained the trust of investors, as seen by its enormous ₹61,973.76 crore AUM, which is the largest on our list. The fund tops the field with an outstanding 3-year CAGR of 24.38% and has an exceptional 5-year CAGR of 31.78%. The fund manager’s ability to provide returns above and above what would be anticipated from market movements alone is demonstrated by its alpha of 2.52.
3. Bank of India Small Cap Fund: The Hidden Gem
With a 5-year CAGR of 33.04%, the Bank of India Small Cap Fund produces impressive performance, despite its relatively low AUM of ₹1,658.26 crore. With the second-highest alpha score of 2.83 and a modest cost ratio of 0.45%, this product achieves a great mix, showcasing the fund manager’s ability to regularly beat the benchmark.
4. Canara Robeco Small Cap Fund: The Steady Performer
Canara Robeco Small Cap Fund completes our top five with a respectable AUM of ₹12,543.87 crore and a steady 5-year CAGR of 30.35%. This fund provides a balanced approach to small size investing with a competitive cost ratio of 0.47%, making it appropriate for investors looking for both stability and growth potential in the erratic small cap market.
5. Edelweiss Small Cap Fund: The Risk-Adjusted Return Master
With the greatest alpha (3.19) and Sharpe ratio (0.72) of our top five picks, Edelweiss Small Cap Fund stands out for investors who are worried about striking a balance between risk and profit. The fund is especially appealing to investors on a budget because it maintains the lowest expense ratio on our list at only 0.38% while delivering a strong 5-year CAGR of 30.20%.
Conclusion
Small cap funds have more volatility even though they have great growth potential. Investors with a lengthy time horizon (5+ years) and a moderate to high risk tolerance are the ideal candidates for these funds. While keeping a balance with more reliable investing alternatives on a mutual fund app, think about strategically putting a portion of your portfolio to these small cap funds that have demonstrated strong performance. You may increase your total returns while successfully controlling risk by adding some of these top-performing small cap funds to a well-diversified portfolio.