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Small-cap mutual funds offer investors a unique opportunity to invest in the growth potential of smaller companies that may eventually evolve into large-cap giants. While these funds are typically more volatile than their large-cap counterparts, the rewards can be substantial for those who are willing to take on the extra risk. In 2024, small-cap funds are expected to benefit from economic recovery and growth in emerging sectors, making them a lucrative option for investors. Here’s a comprehensive look at the top 10 best small-cap mutual funds to consider for investment in 2024.
1. SBI Small Cap Fund
The SBI Small Cap Fund has consistently been one of the best performers in the small-cap segment. It primarily invests in companies that are leaders in their respective industries or have the potential to become leaders. The fund is well-diversified across sectors, reducing the risk of overexposure to any particular industry.
Key Features:
- Fund Manager: R. Srinivasan
- Inception Date: September 2009
- Assets Under Management (AUM): ₹16,000 crore
- 1-Year Return: 34.50%
- 5-Year Return: 23.76%
- Expense Ratio: 0.87%
- Benchmark: S&P BSE Small Cap TRI
2. HDFC Small Cap Fund
HDFC Small Cap Fund is known for its disciplined approach to stock selection, focusing on companies with robust fundamentals and sustainable growth prospects. The fund’s strategy includes investing in both emerging companies and established small-cap firms.
Key Features:
- Fund Manager: Chirag Setalvad
- Inception Date: April 2008
- AUM: ₹14,500 crore
- 1-Year Return: 31.22%
- 5-Year Return: 21.45%
- Expense Ratio: 0.86%
- Benchmark: Nifty Small Cap 100 TRI
3. Nippon India Small Cap Fund
Nippon India Small Cap Fund is well-regarded for its aggressive investment strategy, focusing on high-growth potential companies. The fund’s diversified portfolio spans multiple sectors, allowing investors to benefit from growth across different industries.
Key Features:
- Fund Manager: Manish Gunwani
- Inception Date: September 2010
- AUM: ₹22,000 crore
- 1-Year Return: 36.90%
- 5-Year Return: 25.10%
- Expense Ratio: 0.91%
- Benchmark: Nifty Small Cap 250 TRI
4. Kotak Small Cap Fund
Kotak Small Cap Fund focuses on investing in high-growth companies within niche sectors. The fund’s portfolio is carefully curated to include companies that have demonstrated strong potential for expansion, making it an attractive option for long-term investors.
Key Features:
- Fund Manager: Pankaj Tibrewal
- Inception Date: February 2005
- AUM: ₹8,000 crore
- 1-Year Return: 32.15%
- 5-Year Return: 22.80%
- Expense Ratio: 0.90%
- Benchmark: Nifty Small Cap 100 TRI
5. Axis Small Cap Fund
Axis Small Cap Fund is known for its stringent stock selection process, focusing on companies with strong fundamentals and long-term growth potential. The fund has consistently outperformed its benchmark, making it a favorite among conservative investors seeking exposure to small-cap stocks.
Key Features:
- Fund Manager: Anupam Tiwari
- Inception Date: November 2013
- AUM: ₹7,500 crore
- 1-Year Return: 29.50%
- 5-Year Return: 20.75%
- Expense Ratio: 0.80%
- Benchmark: Nifty Small Cap 250 TRI
6. ICICI Prudential Small Cap Fund
ICICI Prudential Small Cap Fund offers a well-diversified portfolio with a mix of small-cap and mid-cap stocks. The fund’s strategy involves investing in companies with strong fundamentals and potential for growth, making it a solid choice for investors looking for long-term capital appreciation.
Key Features:
- Fund Manager: Sankaran Naren
- Inception Date: October 2007
- AUM: ₹10,000 crore
- 1-Year Return: 33.00%
- 5-Year Return: 22.50%
- Expense Ratio: 0.85%
- Benchmark: Nifty Small Cap 100 TRI
7. DSP Small Cap Fund
DSP Small Cap Fund has built a reputation for its rigorous research and disciplined investment approach. The fund targets companies with high growth potential and strong management teams, ensuring a quality portfolio that has consistently delivered strong returns.
Key Features:
- Fund Manager: Vinit Sambre
- Inception Date: June 2007
- AUM: ₹9,000 crore
- 1-Year Return: 30.75%
- 5-Year Return: 21.00%
- Expense Ratio: 0.88%
- Benchmark: S&P BSE Small Cap TRI
8. Aditya Birla Sun Life Small Cap Fund
Aditya Birla Sun Life Small Cap Fund is recognized for its aggressive investment strategy, targeting high-growth companies in emerging sectors. The fund’s diversified portfolio includes companies from various industries, providing investors with multiple growth opportunities.
Key Features:
- Fund Manager: Jayesh Gandhi
- Inception Date: May 2007
- AUM: ₹6,500 crore
- 1-Year Return: 31.00%
- 5-Year Return: 20.50%
- Expense Ratio: 0.89%
- Benchmark: S&P BSE Small Cap TRI
9. L&T Emerging Businesses Fund
L&T Emerging Businesses Fund specializes in investing in companies that are leaders in niche segments or have the potential to become industry leaders. The fund’s focus on early-stage high-growth companies has resulted in robust performance over the years.
Key Features:
- Fund Manager: Karan Desai
- Inception Date: May 2014
- AUM: ₹5,000 crore
- 1-Year Return: 32.50%
- 5-Year Return: 21.80%
- Expense Ratio: 0.92%
- Benchmark: Nifty Small Cap 250 TRI
10. Franklin India Smaller Companies Fund
Franklin India Smaller Companies Fund offers a diversified portfolio that focuses on companies with strong potential for growth. The fund’s disciplined investment approach and focus on long-term capital appreciation make it an excellent choice for investors with a higher risk tolerance.
Key Features:
- Fund Manager: Janakiraman V
- Inception Date: January 2006
- AUM: ₹7,200 crore
- 1-Year Return: 28.75%
- 5-Year Return: 19.50%
- Expense Ratio: 0.84%
- Benchmark: Nifty Small Cap 100 TRI
Conclusion
Investing in small-cap mutual funds can be an effective way to gain exposure to the growth potential of emerging companies. While these funds come with higher volatility and risk, the rewards can be substantial for investors who are patient and willing to stay invested for the long term. The funds listed above have consistently delivered strong performance and are well-positioned to continue doing so in 2024. As always, it’s essential to assess your investment goals, risk tolerance, and time horizon before making any investment decisions. Diversification across different asset classes and sectors is also recommended to mitigate risk and optimize returns.
Discover more: The Best Mutual Funds for the Next 10 Years: A Long-Term Investment Guide
