Small Cap mutual funds are a type of equity mutual funds that primarily concentrate on investing in small-cap stocks. Small-cap stocks are shares of companies with a market capitalization below Rs. 5,000 crore. These funds are known for their potential for substantial growth and attractive returns; however, they typically exhibit higher volatility when compared to mid-cap and large-cap funds.
Seasoned investors may be drawn to these funds due to their growth potential, but it is crucial to carefully assess and acknowledge the risks of investing in small-cap funds.
The Edelweiss Small Cap Fund (Regular) is a potential option for investors seeking to invest for a minimum of 3-4 years with an appetite for very high returns. The open-ended scheme has achieved a return of 30.74% since its launch, compared to the NIFTY Smallcap 250 TRI benchmark. Investors can start investing in the mutual fund scheme with a minimum SIP investment of only Rs 100.
It is important for investors to be prepared for the potential of experiencing higher losses in their investments.
Investment objective
The objective of the scheme is to achieve long-term capital growth by focusing on a portfolio primarily comprised of equity and equity-related securities of small-cap companies. This fund specializes in investing in smaller companies, which typically experience greater declines in stock prices during market downturns compared to funds investing in larger companies.
The Edelweiss Small Cap Fund Direct – Growth is a mutual fund scheme focused on small-cap companies offered by Edelweiss Mutual Fund. Launched on 18/01/2019, this fund has been in operation for 5 years and 9 months.
As of September 30, the fund boasts assets under management worth Rs 4,293 Crores, positioning it as a medium-sized fund within its category. With an expense ratio of 0.37%, Edelweiss Small Cap Fund Direct – Growth maintains lower costs compared to its peers in the small-cap fund space.
Over the past year, this fund has delivered impressive returns of 44.21%. Since its inception, it has achieved an average annual return of 32.81%, doubling the initial investment every 3 years.
Benchmarked against NIFTY Smallcap 250 TRI, investors can start a systematic investment plan (SIP) in the mutual fund scheme with a minimum investment amount of only Rs 100.
The majority of the fund’s investments are allocated to sectors such as Capital Goods, Financial, Healthcare, Services, and Construction. Notably, Edelweiss Small Cap Fund Direct – Growth has taken a lesser exposure to Capital Goods and Financial sectors in comparison to other funds in the same category.
The top 5 holdings of the fund include UNO Minda Ltd., Kei Industries Ltd., Ajanta Pharma Ltd., Jubilant Ingrevia Ltd., and BSE Ltd. With a strong track record of performance and strategic sectoral allocations, Edelweiss Small Cap Fund Direct – Growth presents a compelling option for investors seeking exposure to small-cap companies.
Scheme performance
According to the scheme’s performance, if an individual had invested Rs 7,100 every month in the small cap scheme through SIP since its inception, their total investment would have grown to Rs 10,13,260. Out of this amount, Rs 4,26,000 represents the initial investment made over a period of 5 years. As of the current year, the MF scheme has yielded a return of 27.71%.
Disclaimer: Business Today provides market and mutual fund news for informational purposes only and should not be construed as investment advice. All mutual fund investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.