This Small Trick Could Help You Gain Over Rs 40,000 in Small Cap Mutual Funds

Top Performing Small-Cap Mutual Funds: Direct vs. Regular Plans

The table below highlights two high-performing small-cap mutual fund schemes and compares their direct and regular plans based on NAV, 5-year CAGR, and assets under management (AUM):

Note: Information in the table provided as of November 28, 2024. 

Impact of Direct Plans: Illustrations with Rs. 1,00,000 Invested

1. Quant Small Cap Fund

• Regular Plan Return (5-Year CAGR): 45.71%
• Direct Plan Return (5-Year CAGR): 47.48%

If Rs. 1,00,000 was invested five years ago:

• Final Value (Regular Plan): Rs. 6,56,821
• Final Value (Direct Plan): Rs. 6,97,695
• Difference: Rs. 40,874

2. Bank of India Small Cap Fund

• Regular Plan Return (5-Year CAGR): 36.89%
• Direct Plan Return (5-Year CAGR): 39.16%

If Rs. 1,00,000 was invested five years ago:

• Final Value (Regular Plan): Rs. 4,80,683
• Final Value (Direct Plan): Rs. 5,21,882
• Difference: Rs. 41,199

Direct vs. Regular Mutual Funds: Understanding the Key Differences

Every mutual fund scheme offers two plans – direct and regular. The primary distinctions between the two revolve around:

1. Purchase Method: Direct plans are bought directly from the asset management company (AMC), while regular plans involve intermediaries.
2. Net Asset Value (NAV): Direct plans have higher NAVs as they exclude distributor commissions.
3. Ongoing Costs: Direct plans feature lower expense ratios, resulting in better returns for investors.

Conclusion 

Even a small percentage difference in CAGR (e.g., 1.77% in Quant Small Cap Fund) can lead to a considerable disparity in returns over time due to compounding.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.