Small-Cap Mutual Fund With Rs 61,974 Crore AUM: An Investment of Rs 1,00,000 Turned Into Rs 3,97,870 in Just 5 Years

Launched on January 1, 2013, the fund has demonstrated a strong performance history, making it a notable option for investors seeking exposure to small-cap equities.

The Nippon India Small Cap Fund Direct-Growth is a prominent mutual fund in the Small-Cap category, managed by Nippon India Mutual Fund. Launched on January 1, 2013, the fund has demonstrated a strong performance history, making it a notable option for investors seeking exposure to small-cap equities.

Fund Overview

• Assets Under Management (AUM): As of December 31, 2024, the fund's AUM stands at Rs 61,974 crore, classifying it as a medium-sized fund within its category.
• Net Asset Value (NAV): The NAV was Rs 177.11 as of January 24, 2025.
• Expense Ratio: The fund charges an expense ratio of 0.68 per cent, which is competitive compared to other small-cap funds.

Performance Metrics

The fund has delivered impressive returns across various time horizons:

• 1-Year Return: 12.83 per cent
• 3-Year Annualized Return: 24.28 per cent
• 5-Year Annualized Return: 31.81 per cent
• Since Inception: 25.86 per cent per annum

These figures indicate the fund's robust performance, particularly over the long term.

Risk and Volatility Measures

Understanding the fund's risk profile is crucial:

• Standard Deviation: 14.84, higher than the category average of 11.67, suggesting greater volatility.
• Beta: 0.81, indicating lower sensitivity to market movements compared to the category average of 1.04.
• Sharpe Ratio: 1.3, below the category average of 6.8, reflecting less favourable risk-adjusted returns.

While the fund exhibits higher volatility, its beta value suggests it is less reactive to market fluctuations.

Portfolio Composition

The fund's investments are diversified across several sectors:

• Capital Goods: 20.18 per cent
• Financial: 11.04 per cent
• Services: 9.53 per cent
• Healthcare: 7.73 per cent
• Consumer Staples: 7.47 per cent

Top holdings include:

• HDFC Bank Ltd.: 1.9 per cent
• Multi Commodity Exchange of India Ltd.: 1.86 per cent
• Apar Industries Ltd.: 1.5 per cent
• Kirloskar Brothers Ltd.: 1.49 per cent

This sectoral allocation indicates a significant emphasis on capital goods and financial sectors.

Investment Objective

The fund aims to generate long-term capital appreciation by predominantly investing in equity and equity-related instruments of small-cap companies.

Fund Management

The fund is managed by Mr. Samir Rachh, who holds a B. Com (H) degree from V.G. Vaze College, Mumbai. Before joining Nippon India Mutual Fund, he gained experience at Hinduja Finance, Emkay Research, and Anvicon Research.

Conclusion

The Nippon India Small Cap Fund Direct-Growth has established a commendable track record since its inception. Its substantial AUM, consistent returns, and diversified sectoral investments make it an attractive option for investors aiming for long-term capital growth through small-cap equities. However, potential investors should consider the fund's higher volatility and assess their risk tolerance accordingly.