Top Small Cap Mutual Funds to Invest in 2019

Even though several small cap stocks have delivered huge returns, still the mutual fund distributors promote only the schemes suggested by the established players. In this article, we have identified 4 schemes that are inching towards stellar returns.

SBI Small Cap Fund

This small cap fund has lower risk as compared to its competitor. The scheme intends to generate income and long-term capital appreciation predominantly in equity and related instruments.

However, the only con of this scheme is there is no assurance that the investment objective of the scheme will be realized and the scheme doesn’t assure or guarantee returns. The fund has an expense ratio of 1.29%

Axis Small Cap

Within a short time span, this fund has built a strong track record in high risk and small cap sector. The fund invests the money of the investors in fundamentally strong companies and has a strong compact portfolio and the fund manager doesn’t hesitate to take risks. The preference is given to the companies that have a potential to outperform against the competitors and grow quickly.

The fund emphasizes on building a quality stock portfolio and has captured the market well by delivering superior risk adjusted returns as compared to peers. The asset under management is 358 crore and the fund has accommodated the growth of Rs 10,000 in 5 years.

Principal Tax Savings

This fund primarily invests the investors’ money in multi-cap segment stocks. The preference is given to the growth stocks. What makes this fund superior is its ability to offer attractive returns like the multi-cap fund. The risk-return profile of this fund mirrors the multi-cap offering. However, the fund has fared well over the market cycles and has beaten its competitors in medium and long term span. It falls under ELSS category and the asset under management is Rs 379 crore and the expense ratio is 2.64%. The fund has accommodated the growth of Rs 10,000 in 10 years.

IDBI Equity Advantage

The beleaguered bank which is to be taken over LIC offers this scheme and is different from its peers. The scheme follows a focused investment strategy and the portfolio consists of 30 stocks and the focus is on quality stocks (that have less intense competition, have low debt and sustainable growth models that can fare well in the different business cycle)  that dominate the market.

The investors get distinct benefits of investing in this stock like-low volatility and superior downside protection. While the fund return profile has been inconsistent, but it has emerged to be a strong stock to invest in for the long term. The scheme has Rs 627 crore assets under management, expense ratio is 2.34% and the growth of Rs 10,000 is recorded in 5 years.

Mind you, promoting investment in small cap stocks doesn’t mean that the stock lacks credibility or expertise. The schemes from mid-sized fund houses get moderate inflows because their distribution is not supported by the banks and other financial institutions which is the case with the large players.