Small-cap funds have been doing exceedingly well. Take a look at the 1-year performance of the top 10 performers (Growth option, Direct plans).
Undoubtedly, these are very impressive returns. However, investors are committing the error of investing based on the latest numbers. If you are considering an investment in such a fund, please keep this in mind.
- Invest only if you have an investment horizon of at least 10 years.
- Small-cap funds can be great long-term wealth creators, but they come with increased volatility in the short term. Be prepared.
- Do not ignore the proper asset allocation and go overboard while investing in small-cap funds.
- Check the investment style of the fund manager.
While you can read our take on all funds here, below are the views on select funds by our research analysts.
DSP Small Cap Fund: Associate director of fund research Himanshu Srivastava analysed this fund in March 2023 and assigned a Silver Rating. Read the analyst note.
SBI Small Cap Fund: Senior analyst Kavitha Krishnan analysed this fund in December 2022 and assigned ratings of Neutral (Regular Plan) and Bronze (Direct Plan). Read the analyst note.
HDFC Small Cap Fund: Senior analyst Kavitha Krishnan analysed this fund in June 2022 and assigned ratings of Neutral (Regular Plan) and Bronze (Direct Plan). Read the analyst note.
Kotak Small Cap Fund: Senior analyst Kavitha Krishnan analysed this fund in February 2022 and then assigned ratings of Bronze (Regular Plan) and Silver (Direct Plan). That has now been replaced by the Morningstar Medalist Rating of Gold. Read the note.
DISCLAIMER
© 2023 Morningstar. All rights reserved. The Morningstar name is a registered trademark of Morningstar, Inc. in India and other jurisdictions. This research on securities (“Investment Research”), is issued by Morningstar Investment Adviser India Private Limited. Morningstar Investment Adviser India Private Limited (CIN: U74120MH2013FTC249024), having its registered office at Platinum Technopark, 9th Floor, Plot No 17 & 18, Sector - 30A, Vashi, Navi Mumbai, Maharashtra, 400705, is registered with SEBI as an investment adviser (registration number INA000001357), portfolio manager (registration number INP000006156), and research entity (registration number INH000008686).
Morningstar Investment Adviser India Private Limited has not been the subject of any disciplinary action by SEBI or any other legal/regulatory body. It is a wholly owned subsidiary of Morningstar Investment Management LLC, which is a part of the Morningstar Investment Management group of Morningstar, Inc. In India, Morningstar Investment Adviser India Private Limited has only one associate, viz., Morningstar India Private Limited, and this company predominantly carries on the business activities of providing data input, data transmission and other data related services, financial data analysis, software development etc.
The author/creator of this Investment Research (“Research Analyst”) or his/her associates or immediate family may have (i) a financial interest in the subject mutual fund scheme(s) or (ii) an actual/beneficial ownership of one per cent or more securities of the subject mutual fund scheme(s), at the end of the month immediately preceding the date of publication of this Investment Research. The Research Analyst, his/her associates and immediate family do not have any other material conflict of interest at the time of publication of this Investment Research. The Research Analyst or his/her associates or his/her immediate family has/have not received any (i) compensation from the relevant asset manager(s)/subject mutual fund(s) in the past twelve months; (ii) compensation for products or services from the relevant asset manager(s)/subject mutual fund(s) in the past twelve months; and (iii) compensation or other material benefits from the relevant asset manager(s)/subject mutual fund(s) or any third party in connection with this Investment Research. Also, the Research Analyst has not served as an officer, director or employee of the relevant asset manager(s)/trustee company/ies, nor has the Research Analyst or associates been engaged in market making activity for the subject mutual fund(s).
The terms and conditions on which Morningstar Investment Adviser India Private Limited offers Investment Research to clients varies from client to client, and are spelt out in detail in the respective agreement. The Investment Research: (1) includes the proprietary information of Morningstar, Inc. and its affiliates, including, without limitation, Morningstar Investment Adviser India Private Limited; (2) may not be copied, redistributed or used, by any means, in whole or in part, without the prior, written consent of Morningstar Investment Adviser India Private Limited; (3) is not warranted to be complete, accurate or timely; and (4) may be drawn from data published on various dates and procured from various sources. No part of this information shall be construed as an offer to buy or sell any security or other investment vehicle. Neither Morningstar, Inc. nor any of its affiliates (including, without limitation, Morningstar Investment Adviser India Private Limited, nor any of their officers, directors, employees, associates or agents shall be responsible or liable for any trading decisions, damages or other losses resulting directly or indirectly from the use of the Investment Research. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Wherever any securities are quoted, they are quoted for illustration only and are not recommendatory. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
The Morningstar Medalist Rating is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and re-evaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly.
For more detailed information about the Medalist Ratings, including their methodology, please go to the section titled “Methodology Documents and Disclosures” at http://global.morningstar.com/managerdisclosures.
