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3 Best Small Cap Mutual Funds For Long-Term Investment

Sunil Fernandes

Returns from small cap funds have not been too great, in line with the stock markets, which collapsed following the Covid-19 crisis. The Sensex is still down slightly less than 20 per cent, from peak levels. Here are some small cap funds for those looking at long-term investment.

Axis Small Cap Fund - Growth

This fund has a 5-star rating from Crisil and a 4-star rating from Value Research. The fund has performed poorly over the last 1 year, giving a negative returns of 1.37 per cent and this has largely to do with the fall in the stock markets, after the lockdown due to the coronavirus infections.

However, the 5-year returns is 8.25 per cent on an annualized basis. Long-term returns from stocks, tend to be much better. Among the holdings of the fund, include Galaxy Surfacants, City Union Bank, Aarti Industries, JK Cement etc.

One can invest in the fund through the SIP route as well, wherein the minimum investment required is Rs 500 per month. The net asset value under the growth plan at the moment is Rs 27.99.

SBI Small Cap Fund – Growth

SBI Small Cap Fund has a 5-star rating from Value Research and a 4-star rating from Crisil. The Growth option currently has an NAV of Rs 48.13. The minimum investment required to invest through the SIP route is Rs 500, after an initial investment of Rs 5,000.

SBI Mutual Fund has generated a return of 2.81 in three years and 9.99 per cent in the last 5 years.

Among the holdings of the fund, include names like Dixon Technologies, Hawkins Cookers and Elgi Equipments. It's extremely important to remember that small cap funds are risky, when compared to largecap funds and one has to invest in these funds, only if there is an appetite for risk. Investors, who are risk averse should stay way from small cap funds.

Nippon Small Cap Fund – Growth

This fund has a 4-star rating from Value Research. Nippon Small Cap Fund has generated a returns of 7.77 per cent over a longer term period of 5 years, whereas the short term period of 3-years has generated a negative returns of 3.73 per cent.

The holdings in the fund include stocks like Deepak Nitrite, Navin Flourine International, Tata Consumer, Orient Electric etc.

About 97 per cent of the amount is invested in stocks. The company has negligible cash holdings at the moment. As is the case with all mutual fund schemes, there is an exit load of 1 per cent, if the amount is withdrawn before a period of 1 year. Investors, who have a long term horizon of 5-7 years can consider investing in this fund.


The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.

About the author

Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.

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