The market volatility has brought forth more than how the stock markets respond to macro factors and geopolitical tensions. More than that, it has brought to light some underrated funds that not only bore the heat but also performed better than the market indices. A comparison of returns from other funds of varied market capitalization highlights how small-cap funds have outperformed them in the past five years. This is despite the market crashing down in March 2020 due to Covid-19 and subsequent market slowdowns to date.
Take, for example, the Axis Small Cap Fund which has earned 21.46 per cent returns over the past five years. Since its inception, investors have earned roughly 24.91per cent returns from this fund. This is way higher than the category average of 20.69 per cent returns in the small-cap category.
Another fund is the Nippon India Small Cap fund in this category. With a whopping 19.56 per cent returns that beat the returns of almost all funds in the mutual fund space, investors cannot stop sharing how a persistent investment made at a stretch can help accumulate the necessary corpus.
Comparing returns of these funds with funds of the large and mid-cap category underscore the importance of having at least one of these in your investment portfolio.
| Name of the fund | Fund category | Five-year returns (in %) | Name of the fund | Fund category | Five-year returns (in %) | Name of the fund | Fund category | Five-year returns (in %) |
| Axis Small Cap Fund | Small Cap | 21.46 | Canara Robeco Bluechip Equity Fund | Large Cap | 15.01 | PGIM India Midcap Opportunities Fund | Mid Cap | 21.20 |
| Nippon India Small Cap Fund | Small Cap | 19.56 | Axis Bluechip Fund | Large Cap | 14.09 | Axis Midcap Fund | Mid Cap | 18.62 |
| Kotak Small Cap Fund | Small Cap | 19.42 | UTI Mastershare Unit Scheme | Large Cap | 13.04 | Invesco India Mid Cap Fund | Mid Cap | 16.22 |
The expense ratio in small-cap funds is not too high, thus, allowing you to avail greater returns at lesser costs.
Mutual fund returns
A comparison of returns on similar investments helps us understand how small-cap mutual funds can make a great investment provided one is ready to invest consistently for a prolonged period.
Monthly Investment (in Rs) | Investment tenure (in years) | Name of the fund | Five-year returns (in %) | Corpus accumulated
(in Rs) | Name of the fund | Five-year returns (in %) | Corpus accumulated
(in Rs) | Name of the fund | Five-year returns (in %) | Corpus accumulated
(in Rs) |
| 10,000 | 5 | Axis Small Cap Fund | 21.46 | 10,79,475 | Canara Robeco Bluechip Equity Fund | 15.01 | 8,97,069 | PGIM India Midcap Opportunities Fund | 21.20 | 10,71,305 |
| 10,000 | 5 | Nippon India Small Cap Fund | 19.56 | 10,21,442 | Axis Bluechip Fund | 14.09 | 8,74,206 | Axis Midcap Fund | 18.62 | 9,94,119 |
| 10,000 | 5 | Kotak Small Cap Fund | 19.42 | 10,17,316 | UTI Mastershare Unit Scheme | 13.04 | 8,48,976 | Invesco India Mid Cap Fund | 16.22 | 9,28,262 |
Why should you invest?
If you think that regular savings are enough, think again. Merely saving your money in your bank deposits will not garner you the much-needed corpus to take care of your future needs. Investing will do. While staying invested is the key to earning considerable returns, small-cap funds earning high returns eases one’s journey toward a secure financial future.
