The small-cap indexes have had a stupendous run in the recent past. These indexes have been continuously moving up since March. The 6-month returns of these funds is anywhere from 16.13% to 34.49%.
Don't get carried away.
Don't blindly invest in small-cap funds.
Don't over allocate.
Even a small correction in the indexes can mean a much more dramatic correction in individual stocks and funds. The market collapse in 2020 saw small-cap stocks stumble tumultuously. Remember the Global Financial Crisis (GFC) in 2008? The small-cap index came back to those levels only in 2016.
When it comes to funds, each fund manager will construct a portfolio keeping liquidity and risk in mind. That will be dependent on his or her strategy as well as the assets under management (AUM). Accordingly, the number of stocks the portfolio supports as well as the concentration to the top holdings differs.
Here are the largest small-cap funds in terms of assets managed. Look at the difference in stock selection, as well as allocation to the top holdings.
While you can read our take on all funds here, below are the views on select funds by our research analysts.
DSP Small Cap Fund: Himanshu Srivastava analysed this fund in March 2023 and assigned a Silver Rating. Read the analyst note.
SBI Small Cap Fund: Kavitha Krishnan analysed this fund in December 2022 and assigned ratings of Neutral (Regular Plan) and Bronze (Direct Plan). Read the analyst note.
HDFC Small Cap Fund: Himanshu Srivastava analysed this fund in September 2023 and assigned a rating of Bronze. Read the analyst note.
Kotak Small Cap Fund: Nehal Meshram analysed this fund in July 2023 and assigned a rating of Silver. Read the note.
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