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Best Small Cap Mutual Funds in India

31 August 20236 mins read by Angel One
Small-cap equity schemes reached a record-high inflow of Rs 5,472 crore in June 2023, whereas large-cap schemes experienced an outflow of Rs 2,050 crore during the same month.
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According to the latest data from the Association of Mutual Funds in India (AMFI), small-cap mutual fund schemes recorded the highest inflows in June 2023. This surge in inflows comes as the BSE small-cap index approaches its 52-week high amidst a steady rise in equity markets.

AMFI data reveals that net investments in small-cap equity schemes reached a record high of Rs 5,472 crore in June 2023. This marks the third consecutive month of the highest inflows into small-cap funds. On the other hand, large-cap schemes experienced an outflow of Rs 2,050 crore during the same month. However, mid-cap and large & mid-cap schemes witnessed net inflows.

In June 2023, the total net inflow into equity mutual funds amounted to Rs 8,245 crore, compared to Rs 2,906 crore in May 2023. AMFI highlighted this record-high data in a recent call. The total net assets under management (AUM) of the mutual fund industry stood at Rs 44,39,187 crore, with an average AUM of Rs 44,82,314 crore in June 2023.

The small-cap index has been performing strongly, outpacing its headline counterparts and justifying the robust inflows into the scheme. The BSE small-cap index has gained approximately 6% in the last month, 16% in the last six months, and around 30% in the last year.

However, the rising AUM of these schemes poses a challenge for mutual fund managers, as several funds have stopped accepting fresh investments in the small-cap category. Following SBI Small Cap Fund and Tata Small Cap Fund, Nippon India Small Cap Fund recently became the third fund to halt new inflows.

Top five best-performing small-cap funds based on last one-year return:

Scheme Name  AUM (Rs Cr)  1M  3M  6M  1Y 
HDFC Small Cap Fund 18,999.05 5.36% 18.75% 20.76% 42.72%
Quant Small Cap Fund 4,688.18 4.25% 15.94% 13.29% 39.67%
Franklin India Smaller Companies Fund 8,067.50 5.48% 16.55% 20.12% 38.25%
Nippon India Small Cap Fund 28,778.87 4.81% 19.22% 19.41% 37.32%
ITI Small Cap Fund 1,294.70 4.69% 16.89% 18.55% 34.06%

Let’s examine the top-weighted stocks in the portfolios of these mutual funds, based on the latest data. In the HDFC Small Cap Fund, Sonata Software holds a weightage of 4.84%, while Bank of Baroda accounts for 4.09%. Surprisingly, in the Quant Small Cap Fund, Reliance Industries and HDFC Bank hold the majority of the portfolio with a weightage of 9.6% and 7.67% respectively.

Within the Franklin India Smaller Companies Fund, Equitas Small Finance Bank and Brigade Enterprises hold a weightage of 5.15% and 4.13%, respectively. In the Nippon India Small Cap Fund, Tube Investments of India and KPIT Technologies account for 3.25% and 1.76%, respectively.

Lastly, the ITI Small Cap Fund has made significant investments in Jindal Stainless and Gujarat Fluorochemicals, with weights of 2.56% and 2.19%, respectively.

Stocks performance during the  last one year:

Company Name CMP 1-Yr Return %
Jindal Stainless Ltd 368.6 251.89%
Equitas Small Finance Bank Ltd 93.4 128.24%
KPIT Technologies Ltd 1048.8 109.86%
Sonata Software Ltd 955.0 90.48%
Bank Of Baroda 205.5 87.68%
Tube Investments Of India Ltd 3219.0 56.56%
Brigade Enterprises Ltd 559.0 24.10%
HDFC Bank Ltd 1656.0 17.79%
Reliance Industries Ltd 2757.9 13.80%
Gujarat Fluorochemicals Ltd 2764.0 -10.95%

Disclaimer: This blog is exclusively for educational purposes. The securities quoted are exemplary and are not recommendatory.

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