Small-cap mutual funds are one of the most preferred mutual funds among investors who are looking to invest in small cap stocks. One such mutual fund is the Nippon India Small Cap Fund, offered by Nippon India Mutual Fund. In this article, we will provide a comprehensive guide for investors who are considering investing in this fund.
What is Nippon India Small Cap Fund?
Nippon India Small Cap Fund is a small-cap equity mutual fund that invests primarily in stocks of small-cap companies. Small-cap companies are those that have a market capitalization of less than Rs. 5,000 crore. These companies are at an early stage of their growth and have the potential to grow rapidly in the future. However, they are also considered to be riskier than large-cap and mid-cap companies, as they can fall drastically in case of economic downturns.
The investment objective of the Nippon India Small Cap Fund is to generate long-term capital appreciation by investing in a diversified portfolio of equity and equity-related securities of small-cap companies. The fund invests in companies that have growth potential in the future, solid fundamentals, and a competitive advantage in their respective industries.
Overview of Nippon India Small Cap Fund (Data as of 17 March 2023)
NAV
Rs. 99.58
Expense ratio
0.86%
Exit load
1.0%
AUM (Asset under management)
Rs. 23,910 Crs
Benchmark
NIFTY Smallcap 250 TRI
Minimum SIP
Rs. 100
Lumpsum
Rs. 5000
Lock-in
No Lockin
Stamp duty
0.005%
1 year returns
10.05%
3 year returns
43.79%
Who should invest in Nippon India Small Cap Fund?
Nippon India Small Cap Fund is suitable for investors who are looking to invest in the small-cap segment of the equity market and are willing to take on higher risk. Investors should also have a long-term investment horizon of at least 5-7 years to earn maximum returns. Additionally, investors should also have a diversified portfolio and should not rely on this fund as the sole investment in their portfolio.
The minimum amount to invest in the fund is Rs. 5,000 for the lump sum investment and Rs. 1,000 for the systematic investment plan (SIP). Investors can also opt for SWP (Systematic investment plan) if they want to earn regular income. You can use a SWP calculator to get the idea of estimated returns.
Tax implications
Investors should also consider the tax implications of their investment in the fund. The gains from the fund are subject to long-term capital gains tax if the mutual fund investment is held for more than one year. The current LTCG tax rate is 10% (without indexation) on gains over Rs. 1 lakh. On the other hand, if you hold the funds for less than 1 year, the capital gains tax rate is 15%.
Conclusion
Nippon India Small Cap Fund is a small-cap equity mutual fund that offers higher returns in the long term. It's important for investors to carefully consider their investment goals, risk tolerance, and the fund's investment strategy before investing in the fund.
Investors should also consider the fund's past performance, expense ratio, and tax implications before making any investment decisions. It's always recommended to consult with a financial advisor