Best Small Cap Mutual Funds to Invest in 2021

Top Performing Small Cap Funds to Invest in 2021 in India

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 2020-21

The following are the top-rated small-cap funds as per ZFunds scoring for the quarter ended 30th Sept. 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.

List of Best Small-Cap Mutual Funds

Fund NameAUM (in Crores)1-Year Return3-Year Return5-Year Return
Edelweiss Small Cap Fund58534.01--
Nippon India Small Cap Fund10,39828.540.8812.07
SBI Small Cap Fund6,20230.473.4515.74
Axis Small Cap Fund3,36621.609.4013.68
HDFC Small Cap Fund9,32317.66-0.9310.46
L&T Emerging Businesses Fund5,75114.70-3.4310.66
DSP Small Cap Fund5,79134.06-0.459.72
Aditya Birla Sun Life Small Cap Fund2,40318.86-7.006.96
Kotak Small Cap Fund2,15433.264.6012.38
Franklin India Smaller Companies Fund6,15216.63-3.197.66

*Returns as of 23 December 2020 and AUM as of 30 November 2020.

1. Edelweiss Small Cap Fund

Edelweiss Small Cap Fund is ranked highest in the small-cap category because of its high returns since Inception. It was launched in February 2019 and since then it has outperformed its benchmark.

Edelweiss Small Cap Fund has 71 stocks in its portfolio of which major allocation has been made to emerging sectors like engineering, chemical, construction & healthcare, etc. The Fund also has a major allocation of approximately 49% in Mid-cap stocks.

Edelweiss Small Cap Fund can be a good choice for investment for the long term, as it is among the top funds in the category.

  • ₹10,000 invested in February 2019 would have been approx. ₹14,500.
  • ₹1,000 invested in monthly SIP since February 2019 would have been approx. ₹29,600.

2. 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.

The fund has been ranked among the top funds due to its high scores in various parameters like concentration, consistency, risk-adjusted score, capture ratio & volatility as per ZFunds ratings. Also, the fund has the highest score in the important metric of valuations.

Nippon India Small Cap Fund is a great investment in the Small Cap Category.

  • ₹10,000 invested in December 2015 would have been approx. ₹17,100.
  • ₹1,000 invested in monthly SIP since January 2016 would have been approx. ₹82,300.

3. SBI Small Cap Fund

SBI small-cap fund has delivered good returns in the past years because of which it is among the top 3 funds in the category. It has given the highest average returns in the previous 5-year period.

SBI small-cap fund has consistently outperformed its benchmark and category average returns with significant margins as per the ZFunds ratings.

SBI small cap can be a good choice of investments in the category for long-term investments.

  • ₹10,000 invested in December 2015 would have been approx. ₹19,800.
  • ₹1,000 invested in monthly SIP since January 2016 would have been approx. ₹91,000.

4. Axis Small Cap Fund

Launched in 2013, Axis Small Cap Fund has consistently outperformed its benchmark to date by significant margins. 

The fund has made it to the Top 5 because of its high scores across many parameters including performance against benchmark, capture Ratio, risk-adjusted score,& consistency as per ZFunds Ratings.

Axis Small Cap Fund is also an excellent choice for long-term investments and can generate high risk-adjusted returns for its investors.

  • ₹10,000 invested in December 2015 would have been approx. ₹19,600.
  • ₹1,000 invested in monthly SIP since January 2016 would have been approx. ₹89,000.

5. HDFC Small Cap Fund

HDFC Small Cap Fund is ranked in the top 5 funds of the category because of its consistency of delivering good returns in the past years.

HDFC Small Cap Fund has got a good overall score and is amongst the high scorers in the metrics of performance against benchmark, capture ratio, volatility, and valuations score as per the ZFunds ratings.

HDFC Smallcap could be a good choice for long-term investments in the category as it carries the potential to outperform in the coming years.

  • ₹10,000 invested in December 2015 would have been approx. ₹15,900.
  • ₹1,000 invested in monthly SIP since January 2016 would have been approx. ₹75,300.

More Information:

Best Large Cap Mutual Funds to Invest in India
Best Small Cap Mutual Funds to Invest in India
Best ELSS Mutual Funds to Invest in India
Best Multi Cap Mutual Funds to Invest in India
Best Mid Cap Mutual Funds to Invest in India
What is SEBI - Meaning, Functions, Powers, Regulations
Difference between Large Cap, Mid Cap and Small Cap Funds
Hedge Funds in India: Meaning, Benefits, Hedge Fund vs Mutual Fund
ELSS vs ULIP: Risk, Cost, Returns, Coverage, Tax Benefits, which is Better
Important Tips for Mutual Fund Investment
 

Last Updated: 28-Dec-2020

Comments

Send Icon