Around 23 small cap schemes have completed two years of existence in the market. Out of these 23 small cap schemes, three schemes – Aditya Birla Sun Life Small Cap Fund, Kotak Small Cap Fund, and PGIM India Small Cap Fund – have underperformed their benchmarks in two consecutive years in 2022 and 2023. (See table for details) We considered regular and growth options for the analysis.
These three schemes from the list have underperformed their respective benchmarks in 2024 so far. Aditya Birla Sun Life Small Cap Fund gave 2.91% in CY2024 so far against 5.79% by its benchmark (S&P BSE 250 Small Cap – TRI). Kotak Small Cap Fund and PGIM India Small Cap Fund gave 1.89% and 0.97% respectively against 6.31% by their benchmark (Nifty Smallcap 250 – TRI).
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Aditya Birla Sun Life Small Cap Fund was launched in May 2007. The scheme has underperformed its benchmark since 2019. Kotak Small Cap Fund has underperformed against its benchmark since 2022. PGIM India Small Cap Fund was launched in 2021 and has underperformed against its benchmark since 2021. Small cap schemes are benchmarked against Nifty Smallcap 100 – TRI, Nifty Smallcap 250 – TRI, and S&P BSE 250 Small Cap – TRI. Note, We considered yearly returns from 2018 as Sebi did recategorization of mutual funds in this year.
Note, the above exercise is not a recommendation. The exercise was done to find which small cap schemes have failed to beat their respective benchmarks in two consecutive years.
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One should not make investment or redemption decisions based on the above exercise. One should always consider risk profile, investment horizon and goal.
If you are looking for recommendations, see:
Best small cap mutual funds to invest in April 2024
Smallcap schemes are recommended for aggressive investors. Investors should consider investing in them only if they have a high-risk appetite and a long investment horizon.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)