Investing your hard-earned money wisely is essential, whether risk-averse or seeking high returns. For those willing to embrace a bit more risk, equity mutual funds, especially small-cap funds, offer a promising opportunity for significant returns.
Small-cap funds invest in companies with a market capitalization of less than ₹5,000 crores. While these funds carry higher risks due to market volatility, they have consistently provided impressive returns over the long term.
Mutual funds, particularly small-cap funds, have become increasingly popular among investors due to their potential for substantial long-term growth. Although they may pose more risk than other investments, the possibility of higher returns over an 8-10 year period makes them attractive.
Additionally, mutual funds often offer better interest rates than traditional government schemes and bank deposits, further enhancing their appeal. The recent improvements in equity markets have also contributed to the rising interest in mutual fund investments.
High-Performing Small-Cap Funds
Several small-cap funds have shown outstanding performance over the years. For example:
- Nippon India Small Cap Fund: 32.03% return over 3 years, 38.65% over 5 years, and 25.95% over 10 years.
- Quant Small Cap Fund: 31.75% return over 3 years, 49.87% over 5 years, and 22.24% over 10 years.
- LIC MF Small Cap Fund: 29.42% return over 3 years, 32.75% over 5 years, and 22.96% over 10 years.
- Tata Small Cap Fund: 27.14% return over 3 years, 35.26% over 5 years.
- HDFC Small Cap Fund: 25.83% return over 3 years, 30.15% over 5 years, and 21.71% over 10 years.
List of other Small-Cap Funds
Let’s examine the list of small-cap fund schemes that have given more than 17% returns in the last 3, 5, and 10 years.
- Invesco India Small Cap Fund has returned 26.95% in 3 years and 34.58% in 5 years.
- Canara Robeco Small Cap Fund has returned 27.31% in the last three years and 37.41% in five years.
- The ICICI Prudential Small Cap Fund has returned 24.32% in 3 years, 31.66% in 5 years, and 18.53% in 10 years.
- The SBI Small Cap Fund has returned 25.02% in the last three years, 31.55% in five years, and 25.71% in ten years.
- Kotak Small Cap Fund has returned 23.42% in 3 years, 35.06% in 5 years, and 22.80% in 10 years.
These returns highlight the potential for long-term growth in small-cap funds. Investors looking for higher returns over time might find these funds particularly appealing.
The Long-Term Advantage of Small-Cap Funds
Small-cap mutual funds offer a compelling investment opportunity for those seeking higher returns despite the associated risks. These funds have shown significant growth over the past 8 to 10 years, making them a viable option for long-term wealth accumulation.