This article highlights some of the best small-cap mutual funds for 2024, providing insights into their performance and benefits.
Investing in small-cap mutual funds can reward those seeking significant capital growth. These funds invest in smaller companies that have the potential to become tomorrow’s market leaders. While they come with higher risks, the returns can be substantial over the long term. Understanding the best options available for investors interested in incorporating these funds into their portfolios is important. This article highlights some of the best small-cap mutual funds for 2024, providing insights into their performance and benefits.
Small-cap mutual funds primarily invest in companies with smaller market capitalisations, typically below Rs 5,000 Crore. These companies are in the early stages of growth and have significant potential for expansion. However, they are also more volatile and can be impacted more by market fluctuations than large-cap stocks. Therefore, investing in small-cap mutual funds requires a higher risk tolerance and a long-term investment horizon.
The best way to invest in these funds is through a Systematic Investment Plan (SIP). Before investing in the best mutual funds, it’s essential to understand SIP investment.
A SIP allows investors to invest a fixed amount regularly in mutual funds. It is an excellent way to invest in these funds, enabling investors to benefit from rupee cost averaging and instilling financial discipline. By investing consistently, investors can more effectively utilise market volatility.
The ICICI Prudential Smallcap Fund has demonstrated strong performance, with over 25% CAGR returns in both the 3-year and 5-year periods. This fund focuses on investing in high-growth potential small-cap companies, making it an attractive option for long-term investors seeking significant capital appreciation.
Kotak Small Cap Fund is another top performer in the small-cap segment. With a solid 3-year return of ~24% and an impressive 5-year return of ~30%, this fund has consistently outperformed its benchmarks. The fund’s strategy involves identifying undervalued small-cap stocks with strong growth prospects.
Tata Small Cap Fund stands out with its exceptional 3-year and 5-year returns of ~27% and ~30%, respectively. This fund focuses on small-cap companies that exhibit strong growth potential and sound management practices. It’s an excellent choice for investors looking for high returns and willing to accept the volatility associated with small-cap stocks.
HDFC Small Cap Fund has delivered impressive returns, with a 3-year return of ~27% and a 5-year return of ~26%. This fund is known for its robust investment strategy, which includes thorough research and selection of high-potential small-cap stocks. It’s a strong contender for investors looking for consistent performance in the small-cap space.
Small-cap mutual funds can be an excellent addition to a diversified investment portfolio. Although they offer higher growth potential than large-cap funds, they also have increased volatility. These funds can provide significant returns for investors with a long-term perspective and a higher risk appetite. However, it’s crucial to acknowledge the associated risks and market volatility of investing in the small-cap sector. By choosing from some of the best small-cap mutual funds for 2024, investors can leverage this opportunity to create wealth and secure their future financially.
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