Small cap mutual funds are special types of investment funds that put money into very small companies. In 2024, these funds made impressive gains, with returns over 26.38%. People are excited about them, especially after they received Rs 4,111.89 crore in November 2024.
However, many experts warn that small cap stocks can be risky and may not always do well. While prices are currently high, investing in these funds can help grow your money over time if you are willing to be patient.
According to rules from the Securities and Exchange Board of India (SEBI), small cap funds need to invest in companies ranked lower than 250 in size. They must also put at least 65% of their money into small cap stocks. These smaller companies tend to experience many ups and downs, which makes them riskier than bigger, more established companies.
So, should you invest in these funds? Well, small cap funds have a chance to offer big returns over the long run. For instance, over the last ten years, the average return for small cap funds has been around 19%. But with big potential returns come big risks!
Finding the right companies to invest in can be tough since many are not well-known and can be tricky. It’s important to choose fund managers who know what they are doing and have a good track record, especially during tough times in the market.
Here are a few small cap funds you can think about investing in for long-term growth:
– Axis Small Cap Fund: This fund has been performing in the third quartile for 20 months.
– SBI Small Cap Fund: This one has been in the third quartile for the last nine months.
– Kotak Small Cap Fund
– Nippon India Small Cap Fund
To help you choose the best funds, experts look at several factors, including average returns, consistency, risks during downturns, and how well the fund has done compared to the market.
Remember: Just because a fund did well in the past doesn’t mean it will always do so in the future, so make sure to do your research!
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