85% smallcap mutual funds outperform benchmarks in May

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Around 85% smallcap mutual funds have outperformed their respective benchmarks in May, an analysis of performance showed. Around 27 smallcap funds were there in the said period. Out of these 27 smallcap mutual funds, 23 funds outperformed their respective benchmarks in May. In other words, only four small cap funds failed to beat their benchmarks in the same time period.Aditya Birla Sun Life Small Cap Fund outperformed its benchmark in May. The scheme offered 0.35% return against a negative return of 1.15% by its benchmark (S&P BSE 250 Small Cap – TRI).
Axis Small Cap Fund delivered 1.39% return in the same time period against a negative return of 1.27% by its benchmark (Nifty Smallcap 250 – TRI). Canara Rob Small Cap Fund delivered 2.46% return in May. The scheme is benchmarked against Nifty Smallcap 250 – TRI which lost around 1.27% in the same time period.

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Mahindra Manulife Small Cap Fund gave around 1.02% return in May against a negative return of 1.15% offered by its benchmark (S&P BSE 250 Small Cap – TRI). Quant Small Cap Fund and Tata Small Cap Fund lost around 0.48% and 0.11% in May. The schemes are benchmarked against Nifty Smallcap 250 – TRI which lost 1.27% in the same time period.

Nippon India Small Cap Fund, the largest small cap fund based on assets under management, delivered 1.27% return. The scheme is benchmarked against Nifty Smallcap 250 – TRI which lost 1.27% in the said period. Underperformers

DSP Small Cap Fund and HDFC Small Cap Fund lost 1.83% and 2.27% respectively in May against a negative return of 1.15% by their benchmark (S&P BSE 250 Small Cap – TRI).
PGIM India Small Cap Fund lost 2.25% in May. The scheme is benchmarked against Nifty Smallcap 250 – TRI which lost 1.27% in the same time period. Quantum Small Cap Fund lost 1.27% against its benchmark S&P BSE 250 Small Cap – TRI which lost 1.15% in the same time period.

The small cap mutual funds offered an average return of 0.57% in May. LIC MF Small Cap Fund offered the highest return in May of around 4.24%, followed by Kotak Small Cap Fund which gave 3.75% in the same time period. Out of 27 small cap funds, 16 gave positive returns and 11 gave negative returns.

The small cap funds are benchmarked against Nifty Smallcap 250 – TRI and S&P BSE 250 Small Cap – TRI which lost 1.27% and 1.15%, respectively.

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We considered all small cap funds that were there in the said period. We considered regular and growth options. We calculated returns between May 1, 2024 to May 31, 2024.

Note, the above exercise is not a recommendation. The exercise was done to find how small cap mutual funds performed against their respective benchmarks in May. One should not make investment or redemption decisions based on the above exercise. One should always consider risk profile, investment horizon, and goal before making any investment decision.

Small cap schemes are always considered risky. However, they also have the potential to deliver very high returns over a long period of time. The trouble is these schemes are also notorious for their very long bear phases. When the market gets into a lean phase small cap segments lose heavily as investors look for safer investment options.

This is why ETMutualFunds do not recommend small cap schemes to new and inexperienced investors. We always tell investors to gain experience and knowledge before investing in small cap schemes. We believe that only investors with a very high risk appetite and stomach for volatility should invest in small cap schemes. They also should have a long investment horizon of, say, seven to 10 years.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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