SBI Small Cap Fund: Fund review
Historically, it has been observed that small-sized companies tend to do well — many a time outperforming large-cap companies — when earnings rally kicks in.
Historically, it has been observed that small-sized companies tend to do well — many a time outperforming large-cap companies — when earnings rally kicks in. Investors who believe in this historical trend can consider investing in small cap schemes. But it may take a long time for this trend to materialise. Hence, such investors need to exercise patience and have an investment horizon of 5 to 10 years. The reasons include markets being at all-time highs and earnings recovery remains uncertain, at least in the foreseeable future.
Among the small cap schemes, investors can consider SBI Small Cap Fund. The scheme has been a stellar performer, beating its benchmark and peers by a fair margin. In the past 5- and 10-year periods, the scheme has given 17% and 18% returns, while its peer schemes are way behind as they have given returns of 8% and 13% during the same periods, respectively. Fund manager R Srinivasan is known to spot small cap companies with good management quality, and stable return ratios. This scheme is recommended for investors who believe in market wisdom of high risk fetches high rewards.
Portfolio change (past 6 months)
|New Entrants||Complete Exits||Increase in Allocation|
|Axis Bank||Indian Energy Exchange||Dixon Technologies (I)|
|Can Fin Homes||Aavas Financiers||Kirloskar Oil Engines|
|Carborundum Universal||Gujarat Pipavav Port||Hawkins Cookers|
Returns (in %)
|Period||CAGR Return||SIP CAGR Return||Small Cap- Average CAGR Return (%)|
Returns peer comparison (in %)
|Scheme Name||1 Year||3 Year||5 year|
|Axis Small Cap Fund||23.42||10.82||12.44|
|HDFC Small Cap Fund||-5.06||8.08||10.58|
|L&T Emerging Businesses Fund||-4.63||6.39||11.92|
Kaustubh Belapurkar, Director Fund Research, Morningstar India
Fund manager R Srinivasan uses a bottom-up approach and looks at investing in high quality companies with strong managements. While he primarily looks for growth stocks, he is conscious of valuations and will wait for suitable entry prices for portfolio picks. The team invests in nondisruptive business with strong cash flows and a proven track record.