Smallcap funds have given returns of more than 30 per cent in the last two years. Experts say that as the condition of the country’s economy is getting better. By the way, the companies of the country will get benefit. In such a situation, the returns of these funds can increase further.
The smallcap category of mutual funds has made a big splash this year. In this category of equity mutual funds, investors have got the highest returns during 1 year. Where Largecap Mutual Fund has given 47 percent return in 1 year and Midcav Mutual Fund has given 72 percent return. On the other hand, the smallcap mutual fund category has given an average 100% return to the investors. With this year’s strong performance, the performance of smallcap funds in the last 3 years has also become spectacular. Different funds have given returns up to 33 per cent during these 3 years and investors’ money has doubled here. We have given information about 5 such funds here.
If we look at the data for the last 5 years, then the smallcap category has performed well. It has given a bumper return of 57% in 2017, -29 percent in 2018, -10 percent in 2019, 21 percent in the year 2020 and 50 percent so far this year. In such a situation, investors who want to get big returns with high risk can invest money there.
What is Smallcap Fund- According to the rules of the stock market regulator SEBI, 65 percent of the total amount deposited in a small cap fund is invested in small cap stocks (in shares of small companies). The remaining 35 per cent can be done in largecap, debt or offer document. Stocks outside the list of top 250 companies in terms of market cap are defined as small caps. While investing in small companies, our emphasis is on investing in companies that have strong operating cash flows, clean balance sheets and no major corporate governance issues.
When and by whom to invest the money – Investors with an investment horizon of at least five years and above who want to further strengthen their existing equity portfolio and generate higher risk-adjusted returns, can You can think of investing in small cap funds.
What is the future of Small Cap Mutual Funds – The economy of the country is coming out of recession and the economic recovery is usually associated with a broad recovery in the markets including small caps. The small cap segment is a sector that has not been extensively researched. It also provides the opportunity to generate alpha over time. We have seen over time; Good small cap companies move towards becoming midcap companies and even large cap companies with time. The potential of small cap companies can be harnessed by investing in small cap funds.