Strong growth in small cap category: Top funds with impressive 1-year performance

The stellar performance of small cap stocks is reflected in the outsized performance of the small cap funds

The small cap oriented mutual funds are seen generating alpha for the investors. According to the latest research report published by Goldman Sachs, one of the important characteristics of the multibagger stocks is that most of the multibaggers belong to the small cap and mid cap categories.  

The stellar performance of small cap stocks is reflected in the outsized performance of the small cap funds. While most small cap funds have been able to beat the BSE Sensex returns some of the top performing small cap funds have been able to generate 3x returns of the BSE Sensex. BSE Sensex is up by 11.67 per cent in one year while Quant Small Cap Fund, HDFC Small Cap Fund, Franklin India Smaller Companies Fund, Tata Small Cap Fund and Nippon India Small Cap Fund managed to delivers returns in excess of 35 per cent in the past one year.  

Tata Small Cap Fund is up by 35.72 per cent in past one year alone and ranks fourth in the category (in terms of returns) of small cap funds if we consider the direct plans. The Nifty Small Cap 250 Index TRI is up by 27.69 per cent in the similar period. Tata Small Fund has been able to beat the benchmark index by a good margin.  

If we consider a three-period performance, Tata Small Cap Fund has delivered returns of over 43 per cent and features amongst the top performing small cap funds. Recently Tata Mutual Fund announced that it has decided to stop accepting lumpsum amounts and switch-in investments in Tata Small Cap Fund from July 1, 2023. However, the fund house will continue accepting investments through systematic investment plans (SIPs) and systematic transfer plans (STPs).