


As we are moving from one generation to another, there comes a substantial shift in ideology regarding savings and investments. Earlier, people used to invest in low risky instruments such as FD, RD, PPF but now they are shifting their investments in the stock market. To achieve the goals in the fast-track process, one must understand their risk profile and how to mitigate the losses. If you have a high-risk, long-term investment profile, then like all other financial advisors, we also suggest you to invest in small cap funds. Among the category, many funds have given high returns with approximately 4 times on the invested capital which entails investing in a number of different sectors and securities. So, if you are also looking to invest in such funds, scout at the details provided further.

There are many funds under the small-cap category, but only a few were able to face various market cycles and to provide a good capital appreciation in the long run. These funds are highly risky as they invest in the companies which are under-researched but have high growth potential. So, investors with a penchant for high-risk and who have at least 7-10 years of investment horizon should invest in these funds.

1. DSP Small Cap Fund (G)
Earlier a micro-cap fund, which was categorised in small-cap recently has performed really well in the past 10 years to provide the best returns in the industry. It has managed its losses in bear markets and performed consistently well in various market cycles beating the benchmark and the category, except for the year 2017. 
It has given 4.3 times returns to the investors since launch and can continue to provide the same as the assets of its portfolio are invested in the emerging sectors including chemicals, textiles, and automobile. Though it may affect your growth in the short-term, still, provide enough returns in the long run. 

2. Franklin India Smaller Companies Fund (G)
One of the most consistent schemes of its category, with a better profile to provide risk-adjusted returns, have generated 4.1 times returns in the past 11 years. It has outperformed 91% of its peers with relatively less volatility. 
The fund takes tricky bets in the small-cap segment by paying more emphasis on the company before investing. Its current portfolio holds finance, chemicals, construction, and engineering sectors the most. It has a defensive sector allocation so that it can offer stable returns over the long run. 

3. HDFC Small Cap Fund (G)
Launched 9 years ago in 2008, the fund has delivered 319% returns which is 3.1 times of the invested capital and investors who have invested in it since then have gained a large corpus till now. The fund has managed to take recent correction very well and delivered an average return of around 1.5% over the same period.
The fund is currently investing in chemicals, services, engineering, and techno sector, reducing the finance industry because NBFCs are not performing. So, the investors can expect the same returns from the fund in the long run.

4. SBI Small Cap Fund (G)
Among the top schemes of SBI Mutual Fund, SBI Small-cap has created wealth by providing returns of approximately 395% on the principal amount, i.e., 3.9 times. It has remained a consistent performer but has not faced any serious bearish market as of 2008.
The fund has a very defensive outlook as its portfolio consists of FMCG, finance, engineering, and services sector, which have high future growth as well as regular demands. Investors can consider the fund if they want relatively less volatility than other small-cap funds.

5. Reliance Small Cap Fund (G)
This fund has never underperformed in its history and delivered 3 times returns in the past 8 years, which mean investors can see 4 times returns in the 10 years if they have invested in it since launch. The fund follows the policy of investing in the growth companies available at reasonable prices. 

Currently, it has invested in sensitive industries including chemicals, engineering, technology and textiles, which are risky but offer high returns to the investors in the long run. So, investors need to have the stomach for the risk.

All the above listed small-cap mutual fund schemes invest through a disciplined approach and reward you with high returns. So, invest in the fund which fits the best in your portfolio and most importantly, stay invested!