Small Cap Funds: With a continuous positive growth in Indian Stock Market after Covid, Investments in small cap mutual funds have increased more than double in just a year. Gross inflows into the small cap funds in June 2022 was about 2580 Cr and now it is 7358 Cr in June 2023.
What is Small Cap Fund?
Small Cap Fund is a category of Funds that invest in companies having market cap of 5000 Cr or less. These funds are highly risky but there are higher chances of growth than any other category of Mutual Funds.
These funds provide an opportunity to stay ahead by investing in companies that could become big in the future. They’re riskier because they might struggle in tough times. Great for really adventurous investors who want to invest for 7 or more years.
Now let’s go through the top 3 funds that have converted 10K Monthly Investment into 14 Lakhs over a period of just 5 Years.
HDFC Small Cap Fund – Direct Plan
The HDFC Small Cap Fund’s direct plan has provided a 21.13% return over the past six months. This plan follows the S&P BSE 250 SmallCap Total Return Index.
Expense Ratio: 0.77%, This is the cost of managing the fund, including taxes. It’s taken from your investment.
Exit Load: If you take out your money within 1 year, there’s a charge of 1%.
Stamp Duty: From July 1st, 2020, a fee of 0.005% applies to your investment.
Tax Details: If you withdraw in less than a year, 15% tax applies.
If you wait for a year, a 10% tax on gains over Rs 1 lakh is due.
Franklin India Smaller Companies Fund – Direct Plan
The direct plan for the Franklin India Smaller Companies Fund has yielded an annualized return of 20.36% in the past six months. The fund’s performance is linked to the NIFTY Smallcap 250 Total Return Index.
Expense Ratio: 0.82% This is the cost for managing the fund, and it includes taxes like GST.
Exit Load: If you take out your money within a year, there’s a charge of 1%.
Stamp Duty: Starting from July 1st, 2020, there’s a small fee of 0.005% on your investment.
Tax Details: If you withdraw before a year, 15% tax applies.
Waiting for a year? If your returns are over Rs 1 lakh, you pay a 10% LTCG tax.
Nippon India Small Cap Fund – Direct Plan
The Nippon India Small Cap Fund’s direct plan has generated an annualized return of 19.79%. The fund’s performance is aligned with the NIFTY Smallcap 250 Total Return Index.
Expense Ratio: 0.75% This is the fee for taking care of your investment, and it includes GST (a type of tax).
Exit Load: If you take your money out within a month, there’s a charge of 1%.
Stamp Duty: Starting from July 1st, 2020, a small fee of 0.005% is added to your investment.
Tax Details: If you take out your money before a year, 15% tax applies. If you wait for a year, and your returns are more than Rs 1 lakh, a 10% LTCG tax is needed in that financial year.
So, these are the three funds that we wanted to share with our readers. I hope you like our research and please do your own research before investing.
Note: Investments in the Mutual Funds are subject to market risks, please read the related documents carefully before investing on AMF India.
