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India's Small Caps Shine: Fund Showdown
6 Jul
Summary
- Small-cap funds have shown significant wealth creation potential in India.
- Nippon India and Bandhan Small Cap Funds are top performers.
- Bandhan Small Cap Fund offers higher risk-adjusted returns.
- Nippon India Small Cap Fund has investment limits due to large AUM.
Small-cap equity markets in India have shown significant wealth-creation potential, particularly over the last five years. Two prominent funds, Nippon India Small Cap Fund and Bandhan Small Cap Fund, are frequently considered by investors.
Nippon India Small Cap Fund, launched in September 2010, manages the largest AUM in its category and follows a Growth at a Reasonable Price (GARP) strategy. However, its substantial size has led to investment limits on new SIP and STP registrations since July 2023.
Bandhan Small Cap Fund, a more recent entrant established in February 2020, focuses on value investing with a quality and growth approach. It has outperformed its larger peer on a since-inception basis, offering higher risk-adjusted returns with a comparatively lower AUM.
For investors seeking a balance of value and growth with superior risk-adjusted returns, Bandhan Small Cap Fund is a notable option. Those prioritizing a longer track record and large AUM might lean towards Nippon India Small Cap Fund, though its investment restrictions require consideration. An investment horizon of at least five years and a staggered investment approach like SIP are recommended.
