Mutual Fund SIP Return: Nippon India Small Cap Fund turned Rs 20000 SIP into Rs 1.4 crore

Investment in this small-cap fund might have made you crorepati. Wish to be profitable investing in mutual funds? Then continue reading.

Equity markets have turned topsy-turvy these days, abiding by their nature of being volatile. The market barometer, S&P BSE Sensex ended the last month of 2022 in red, plummeting around 4 per cent. Moreover, for the entire of 2022, Foreign Institutional Investors (FIIs) were net sellers, selling shares worth Rs 2.78 lakh crore. It was Domestic Institutional Investors (DIIs) that helped markets absorb the FIIs selling pressure to end the year positively outperforming prominent global markets. 

Moreover, Small-Caps were the ones that suffered a lot in the last one year, returning negative 5 per cent. However, there were small-cap funds that not just outperformed their benchmark indices, but also returned positive single-digit returns. Nippon India Small-Cap Fund was one of them. 

Nippon India Small-Cap Fund is an offering from Nippon India Mutual Fund that was launched in September 2010. And since its inception, this fund has returned 19.8 per cent. Moreover, a systematic investment plan (SIP) of Rs 20,000 per month in this fund would have turned into Rs 1.4 crore since its inception. The annualised returns of which come to around 23.41 per cent. 

Investment Strategy 

The investment strategy has a lot to do with the performance of the fund. Investment strategy is the base of securities selection for any mutual fund. Nippon India Small-Cap Fund’s investment strategy is to build and maintain a diversified portfolio of stocks primarily focusing on the small-cap space that has the potential to appreciate.  

Their aim is to build a portfolio that adequately reflects a cross-section of the growth areas of the economy from time to time. While the portfolio focuses primarily on a buy-and-hold strategy at most times, it will balance the same with a rational approach to selling when the valuations become too demanding even in the face of reasonable growth prospects in the long run. 

Final Thoughts 

Investing in a small-cap fund is a risky affair and hence, it makes complete sense to assess one’s risk appetite before investing in them. The performance of Nippon India Small-Cap Fund has been quite good as it is able to outscore the category average. However, in terms of risk, as measured by standard deviation and beta, this fund is risker than the category average. However, the risk undertaken is justified by the returns it generates, leading it to the top quartile in terms of Sharpe and Sortino ratios.