SBI Small Cap: 12 Facts About this Mutual Fund that Will Impress You

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The SBI Small Cap Fund is a popular choice among investors seeking exposure to the high-growth potential of India’s small cap companies. As one of the leading small-cap mutual funds in the country, the SBI Small Cap scheme has consistently delivered impressive returns and gained the trust of investors. In this article, we’ll explore 12 key facts about the SBI Small Cap Mutual Scheme that make it a compelling investment option.

  1. The Consistent Performance of SBI Small Cap Fund

The SBI Small Cap Scheme has a proven track record of delivering consistent returns over the long term. Over the past 5 years, the fund has generated an annualized return of 26.5%, outperforming its benchmark and many of its peers in the small cap category.

  1. How will the Experienced Fund Management Team Manage?

The SBI Small Cap Scheme is managed by an experienced team of fund managers who have a deep understanding of the small cap segment. The fund’s lead manager, Sohini Andani, has over two decades of experience in the industry and has consistently demonstrated her ability to navigate the market cycle and identify promising small cap companies.

  1. How well SBI Small Cap Fund Diversified their Portfolio

One of the main advantages of the SBI Small Cap Fund is its well-diversified investing strategy. The fund distributes its assets among a variety of small-cap firms from various sectors and industries rather than focusing its investments in a limited number of companies.When investing in the small-cap market, this diversification method is especially crucial because smaller businesses are typically more erratic and vulnerable to changes in the market than their bigger competitors.The SBI Small Cap Scheme mitigates the impact of a single underperforming investment on the total fund performance by investing in a diverse portfolio of small-cap firms.

The total returns of the fund are not greatly impacted if one or a few of the portfolio’s small-cap firms fail since the profits from the other small-cap holdings can help offset the losses.

  1. What does Sector Allocation of the SBI Small Cap Fund Look?

  • A key component of the SBI Small Cap scheme diversification strategy is its sector allocation technique, which serves to reduce the risks involved in investing in the small-cap market.
    The fund has a well-balanced sector allocation, with investments made in a variety of industries, such as:

    Industrials: The fund makes investments in small-cap firms that are engaged in manufacturing, engineering, and infrastructure-related activities.

  • Consumer Discretionary: The portfolio is exposed to small-cap businesses in the retail, automotive, and consumer services sectors of the consumer discretionary industry.
  • Information technology: The fund makes investments in small-cap technology firms, which have a stronger potential for development but also a higher degree of volatility.
  • Healthcare: The fund is active in the healthcare industry, making investments in medical equipment, small-cap pharmaceuticals, and healthcare service providers.
    By diversifying its investments across these and other sectors, the SBI Small Cap Fund ensures that it is not overly dependent on the performance of any single sector.
  1. SBI Small Cap Fund Serve Low Expense Ratio

The SBI Small Cap Scheme has a relatively low expense ratio of 1.52%, which is lower than the average expense ratio of small-cap funds in the industry. This helps to maximize the returns for investors by reducing the impact of fees on their investments.

  1. You have to Start Investing with a Minimum Investment

The minimum investment required to invest in the SBI Small Cap Mutual Fund is Rs. 5,000 for lump-sum investments and Rs.5,00 for a Systematic Investment Plan. This makes the fund accessible to a wide range of investors, including retail investors.

  1. The SBI Small Cap Offers Liquidity

The SBI Small Cap Scheme offers good liquidity, allowing investors to redeem their units at any time without facing significant restrictions or penalties. This is an important consideration for investors who may need to access their funds in the future.

  1. Tax Efficiency of SBI Small Cap Fund

Investment in the SBI Small Cap Scheme a eligible for tax benefits under Section 80C of the Income Tax Act, making it a tax-efficient investment option for investors.

  1. It Also Offers Flexibility

The SBI Small Cap offers investors the flexibility to choose between growth and dividend options, depending on their investment objectives and financial needs.

Investors have the freedom to select between two distinct investment alternatives with the SBI Small Cap Stock: growth and dividend possibilities. Because of this flexibility, investors may match their investments to their financial tastes and goals.

  • Growth Option: Investors who are interested in long-term wealth generation and capital appreciation may choose the growth option. The net asset value (NAV) of the units increases under this option because the fund’s profits are reinvested back into the fund. Because the full return is represented in the increasing NAV, investors who choose the growth option do not get any periodic dividends.
  • Dividend Option: Investors that want consistent returns on their capital are the target audience for the dividend option. Under this arrangement, the fund pays investors a portion of its profits as dividends regularly, monthly, quarterly, or yearly, for example.

Investors who depend on their assets for consistent income, such as those who are approaching retirement, may find the dividend choice appealing. A consistent flow of cash flow from the quarterly dividend distributions may be utilized to pay for different expenses or reinvested to increase returns over time.

  1. Investors Friendly Features of SBI Small Cap Fund

The fund provides various investor-friendly features, such as the ability to invest through SIPs, the option to switch between different schemes, and the availability of online investment platforms for easy access.

  1. Small Cap Risk Management

The SBI Small Cap scheme employs robust risk management practices, including diversification, stock selection, and monitoring of market conditions, to help mitigate the inherent volatility associated with small-cap investments.

  1. Regulatory Compliance

The SBI Small Cap mutual scheme adheres to the guidelines and regulations set forth by the Securities and Exchange Board of India (SEBI), ensuring a high level of transparency and investor protection.

Conclusion

When it comes to investing in small-cap firms in India with the potential for rapid growth, the SBI Small Cap Scheme is a very attractive choice. For investors ready to accept the increased risk involved with small-cap investing, the fund presents a strong case thanks to its outstanding track record, seasoned management team, and well-diversified portfolio.

For investors looking to capitalize on the growth potential of small-cap companies, starting a SIP (Systematic Investment Plan) in the SBI Small Cap Scheme can be a prudent strategy. By investing a fixed amount at regular intervals, investors can benefit from the power of rupee-cost averaging, smoothing out the impact of market fluctuations and potentially maximizing their returns over the long term.The steady performance of the SBI Small Cap Scheme is one of its main advantages. The fund has produced an annualised return of 26.5% over the last five years, exceeding both its benchmark and several of its small-cap counterparts. The fund manager’s ability to recognise attractive small-cap firms and traverse market cycles is demonstrated by its steady performance.

 

pawansharma

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