SBI small cap fund has given a CAGR of around 18% since lunch but during the last five years the returns have been amazing around 27% (considering the run of the market its expected) same is the case for other small cap funds too. So, I am confused I should include small caps for short term goals considering the high returns or should I use them for long term invest to reduced the risk of their volatility but also getting less gains.
Small cap stocks and funds have become quite risky for almost a year. There has been such volatility that many highly overvalued stocks fell as much as 80%.
Almost all small cap funds have been giving negative returns so it’ll be a good strategy to stick to regular SIPs in funds instead of buying stocks for long term goal. In current scenario, It’s unlikely to get good returns in small cap in short term.
Over the last 5 years, the performance of the small-cap funds is fruitful to the investors. But during the last year, it’s been given a negative return to the investors. See below are the top small-cap mutual fund scheme’s performance.
Reliance Small Cap Fund Growth
Returns - 1 Year: -15.33 & 5 Year 160.27%
DSP Small Cap Fund Growth
Returns - 1 Year: -18.60 & 5 Year 139.65%
Franklin India Smaller Companies Fund Growth
Returns - 1 Year: -15.17% & 5 Year 119.06%
SBI Small Cap Fund Growth
Returns - 1 Year: -14.23% & 5 Year 204.80%
L&T Emerging Businesses Fund - Growth
Returns - 1 Year: -17.25% & 5 Year 129.80%
During this financial year, the performance of the small-cap fund’s return is negative. But if look into long term investment view, these funds have the potential to give good returns to the investors in upcoming years.