For investors eyeing high returns over the long term, the SBI Small Cap Fund has been a rewarding choice, transforming small investments into significant wealth over time. Launched in 2009, this fund has achieved remarkable growth, especially for those investing in small companies with strong growth potential. It’s particularly favored by those willing to hold onto their investments for a longer period, as it leverages the potential of small cap stocks while balancing risk with selective mid and large-cap stocks. Here’s a look into why this fund has gained popularity and how it has rewarded its investors.
SBI Small Cap Fund: A Growth-Focused Strategy with Small Caps
The SBI Small Cap Fund focuses on achieving long-term capital growth by investing predominantly in small cap stocks. These stocks, often from emerging companies with high growth potential, account for at least 65% of the fund’s portfolio. To balance the portfolio’s risk and offer additional stability, up to 35% of the investments are directed towards mid and large-cap companies.
This strategic allocation has enabled the SBI Small Cap Fund to perform exceptionally well, generating substantial returns for both systematic investors (SIP) and lump sum investors.
Impressive Historical Performance of SBI Small Cap Fund
Since its inception, the SBI Small Cap Fund has consistently delivered high returns across various timeframes, making it a favorite for growth-seeking investors. Below is a snapshot of its annualized returns (CAGR) over different periods:
- 1-Year Return: 39.8%
- 3-Year Return: 23.46%
- 5-Year Return: 29.25%
- 15-Year Return: 21.5% (significantly higher than the benchmark return of 13.74%)
How a Lump Sum Investment in SBI Small Cap Fund Has Grown
If you had invested a lump sum of Rs 1,00,000 in the SBI Small Cap Fund 15 years ago, your investment would now be worth approximately Rs 18,81,740. That’s a massive growth of 18.8 times, reflecting the fund’s strong performance over the years. Here’s how the value of Rs 1,00,000 would have changed over different periods:
- After 1 year: Rs 1,40,050
- After 3 years: Rs 1,88,300
- After 5 years: Rs 3,61,150 (3.6 times the original investment)
SIP Investors Reap High Returns with SBI Small Cap Fund
For those who prefer regular, smaller investments, the SBI Small Cap Fund has also delivered significant wealth accumulation through Systematic Investment Plans (SIPs). For instance, if you had invested Rs 5,000 every month for 15 years, your total investment of Rs 9 lakh would now be valued at Rs 64,55,581. That’s more than a sevenfold increase, thanks to an impressive 23.4% annualized return on SIPs.
Here’s a quick summary of how SIP investments have performed in the SBI Small Cap Fund:
- Monthly SIP: Rs 5,000
- Total Investment Over 15 Years: Rs 9 lakh
- Annualized Return on SIP: 23.4%
- Fund Value After 15 Years: Rs 64,55,581
(Data source: Value Research SIP Calculator)
Key Features of SBI Small Cap Fund
The SBI Small Cap Fund is an open-ended equity scheme that primarily targets high-growth opportunities in small cap stocks. Below are some essential details:
- Fund Type: Open-ended equity scheme focused on Small cap stocks
- Assets Under Management (AUM): Rs 34,229.11 crore (as of September 30, 2024)
- Risk Level: Very High
- Inception Date: September 9, 2009
- Benchmark Index: BSE 250 Small Cap Index TRI
- Minimum Investment: Rs 500 (for SIPs)
Asset Allocation in SBI Small Cap Fund
The SBI Small Cap Fund maintains a diversified portfolio to manage risk effectively, focusing heavily on small cap stocks while holding a smaller percentage of mid and large-cap stocks. Here’s the current asset breakdown:
- Small Cap Stocks: 85.71%
- Mid Cap Stocks: 4.76%
- Cash and Other Assets: 7.25%
- Derivatives: 2.28%
Exit Load and Expense Ratios
Investors in the SBI Small Cap Fund should be aware of the exit load and expense ratios:
- Exit Load: 1% if redeemed within one year; no charges after one year
- Expense Ratios: 1.56% for Regular Plan, 0.66% for Direct Plan
Ideal Investor Profile for SBI Small Cap Fund
The SBI Small Cap Fund is best suited for investors who are comfortable with higher levels of risk and have a long-term investment horizon. Small cap stocks, while high in potential, also carry higher volatility, so investors should be prepared for market ups and downs. This fund is ideal for those looking to grow their wealth over an extended period and willing to stay invested through market fluctuations. Consulting a financial advisor can help investors make informed decisions based on their individual risk tolerance and financial goals.
