Best Small Cap Mutual Funds – 30% Return in 3 Years – Start Your SIP With 100 Rs
Best Small Cap Mutual Funds
Small cap mutual funds have garnered attention for their potential to deliver significant returns over time. Systematic Investment Plans (SIPs) offer a disciplined approach to investing in these funds, allowing investors to start with minimal amounts such as ₹100. In this essay, we will delve into the performance of three top small cap mutual funds, each with a remarkable track record of delivering substantial returns over a three-year period.
Table of Contents
Understanding Small Cap Mutual Funds and SIPs
Before delving into specific funds, it’s crucial to grasp the essence of small cap mutual funds and SIPs. Small cap funds primarily invest in companies with small market capitalizations, offering potential for high growth but also carrying higher risk. SIPs, on the other hand, involve investing a fixed amount at regular intervals, enabling investors to benefit from rupee-cost averaging and the power of compounding.
1) Bandhan Small Cap Fund Direct Growth
Bandhan Small Cap Fund has emerged as a prominent player in the small cap segment, attracting investors with its robust performance. With a minimum SIP amount of ₹100, this fund has delivered impressive returns, boasting a 31.5% return over a three-year period. While specific returns for the last six months are not available, the fund’s overall return stands at an impressive 39.2%, reflecting its potential for generating wealth over time.
2) Nippon India Small Cap Fund Direct Growth
Another noteworthy contender in the small cap category is the Nippon India Small Cap Fund. With a minimum SIP amount of ₹100, this fund has recorded remarkable returns, with a 35.0% growth over the last three years. Its one-year return of 58.0% underscores its ability to capitalize on market opportunities and deliver substantial gains to investors. Over a five-year period, the fund has maintained an impressive return of 32.2%, further solidifying its position as a lucrative investment option.
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3) Franklin India Smaller Companies Direct Fund Growth
The Franklin India Smaller Companies Direct Fund has also caught the attention of investors seeking high returns in the small cap segment. Although it requires a slightly higher minimum SIP amount of ₹500, this fund has demonstrated commendable performance, with a 33.2% return over the last three years. Its one-year return of 59.2% highlights its ability to navigate market fluctuations and capitalize on emerging opportunities. Despite a relatively lower long-term return compared to its counterparts, the fund’s consistent performance over the years makes it a compelling choice for investors seeking growth potential in the small cap space.
Factors Driving High Returns
Several factors contribute to the high returns observed in these small cap mutual funds. Firstly, the inherent nature of small cap companies, with their potential for rapid growth and expansion, provides a fertile ground for generating substantial returns. Additionally, the active management strategies adopted by fund managers play a crucial role in identifying promising investment opportunities within the small cap universe. Moreover, the disciplined approach of SIPs ensures that investors stay invested for the long term, allowing them to benefit from the compounding effect and mitigate the impact of market volatility.
Risks and Considerations
While small cap mutual funds offer the potential for high returns, they also come with higher risks compared to large cap or mid cap funds. The volatility inherent in small cap stocks can lead to sharp fluctuations in fund performance, necessitating a long-term investment horizon and a high risk tolerance. Investors should also conduct thorough research and due diligence before investing in any fund, considering factors such as fund manager expertise, portfolio composition, and historical performance.
| Fund Name | Minimum SIP Amount | 1-Year Return | 3-Year Return | 5-Year Return | Overall Return |
|---|---|---|---|---|---|
| Bandhan Small Cap Fund Direct Growth | ₹100 | NA | 74.7% | NA | 39.2% |
| Nippon India Small Cap Fund Direct Growth | ₹100 | 58.0% | 35.0% | 32.2% | 27.2% |
| Franklin India Smaller Companies Direct Fund | ₹500 | 59.2% | 33.2% | 25.8% | 23.0% |
Conclusion
In conclusion, small cap mutual funds present an attractive opportunity for investors seeking high returns over the long term. Through SIPs, investors can embark on a systematic journey of wealth creation, starting with minimal amounts such as ₹100. The exemplary performance of funds like Bandhan Small Cap Fund, Nippon India Small Cap Fund, and Franklin India Smaller Companies Direct Fund underscores the potential of small cap investments to deliver substantial returns. However, investors should approach small cap investing with caution, understanding the associated risks and adopting a disciplined investment approach to maximize their chances of success.
