Top Small Cap Funds 2020
Small Cap Funds are those mutual funds that invest a larger portion of their funds in equity shares of small-cap companies.
The Securities & Exchange Board of India or SEBI categorizes companies whose market capitalization is in the 251st position or lower in the market as Small Cap. Market Capitalization is defined as the market value of all outstanding shares and is achieved by multiplying the total number of shares outstanding by the market price per share.
Some of the characteristics of a small cap fund are as follows:
- Higher probability of growth compared to large caps and mid caps
- Chances of getting outperformed by large caps and mid caps in a weak economy.
- Higher volatility compared to large caps and mid caps.
- Suitable for investors with high investment horizon
- Suitable for investors with very high risk appetite
- Stocks may turn illiquid in case of selloffs
Top Rated Small Cap Funds for 2020
The following are the top-rated small cap funds for the year 2020. The funds with the highest ZF Score (refer methodology here) are ranked at the top. Complete list can be seen in the Annexure at the end of this article.
|Fund Name||ZF Score|
(in Rs. Crores)mo-end
|1-Year Return||3-Year Return||5-Year Return|
|Nippon India Small Cap Fund||8.75||6,995||-23.47%||-7.61%||5.06%|
|SBI Small Cap Fund||7.95||3,280||-14.12%||-0.07%||7.75%|
|L&T Emerging Businesses Fund||7.56||4,268||-32.07%||-11.66%||3.16%|
As on 12 May 2020
1. Nippon India Small Cap Fund
A Top-performing fund, Nippon India Small-Cap Fund has consistently outperformed its benchmark as well as the category average returns over a long period i.e of more than 3 years with significant margins.
The fund has been ranked at the top position due to its highest scores in parameters like concentration, risk-adjusted score, consistency & volatility as per ZFunds ratings. Also, the fund has one of the highest scores in Valuations.
Nippon India Small Cap Fund is a great investment in the Small Cap Category.
- Rs. 10,000 invested in May 2015 would have been approx. Rs.12,518.
- Rs. 1,000 invested in monthly SIP since May 2015 would have been approx. Rs. 54,007.
2. SBI Small Cap Fund
An outperformer for many years running, SBI Small Cap Fund has been ranked at the second position as per ZFunds Ratings.
The fund has performed extraordinarily relative to its peer & benchmark from a long period. Along with that, the fund has also achieved high scores in parameters like risk-adjusted score, capture ratio & volatility.
SBI Small Cap is an excellent choice in the Small-Cap Category for long investments.
- Rs. 10,000 invested in May 2015 would have been approx. Rs.14,312.
- Rs. 1,000 invested in monthly SIP since May 2015 would have been approx. Rs. 61,774.
3. L&T Emerging Businesses Fund
Launched in 2014, L&T Emerging Businesses Fund has fairly outperformed its benchmark to the date by a good margin.
The fund has made it to the Top 3 because of its high scores across many parameters including Capture Ratio, Risk-adjusted score, consistency & volatility as per ZFunds Ratings.
We believe L&T Emerging Businesses Fund to generate high returns for its investors over a long period.
- Rs. 10,000 invested in May 2015 would have been approx. Rs.11,476.
- Rs. 1,000 invested in monthly SIP since May 2015 would have been approx. Rs. 48,751.