Best Small Cap Mutual Funds to invest in 2016

Best Small Cap Mutual Funds to invest in India in 2016Best Small Cap Mutual Funds to invest in India in 2016


While my journey of Rs 1 Crore is over, now I want to quickly achieve such milestones in coming years by making smart investments. While there are several Best Investment Options, one of the best way is to invest in Small Cap Mutual Funds. I have been analyzing some of the Best Small Cap Mutual Funds to invest in 2016. While these are high risk, small cap mutual funds tend to perform better in medium to long run. Which are the Top Small Cap Mutual funds to invest now?  Who should invest in these Best Small Cap Mutual Funds in India?

Best Small Cap Mutual Funds to invest in 2016


These Top and Best Small Cap Mutual Funds in India have been analyzed and shortlisted based on key parameters.

  • Picked based on highest returns received in the last 5 to 10 years. Some of the funds have less than 10 years tenure.
  • Ranked based on 1, 3, 5 and 10 years returns which indicates that such funds perform well in medium to long run.
  • Funds, which are rated by Crisil as Rank-1, Rank-2 and Rank-3 which indicates good fundamentals for these best small cap mutual funds.
  • Value research (VRO) rated these mutual funds as 5 star, 4 star and 3 star.
  • AUMs (Assets under management) > 100 Crores. This proves investor confidence among these top mutual funds.
  • Some of the fund names are indicated as “mid-cap”, however in reality they invest in small cap funds, hence value research online categorises them under Small Cap Mutual Funds.

Also Read: FundsIndia Vs Scripbox Vs ZIPSIP – Which is best mutual fund platform?

Best Small Cap Mutual Funds to invest in 2016


# 1 – DSP BR Micro Cap Fund


DSP BR Micro Cap fund - Best Small Cap Mutual funds to invest in 2016

The aim of the fund is to seek long-term capital appreciation by investing in a portfolio of stocks that are not part of the top 300 companies by market capitalisation.

This is a rare small-cap fund to have beaten its benchmark in every one of the last eight years from 2008. It has also stayed ahead of the peers fund schemes in every year except in 2012.

Why should you invest: This small cap fund has outperformed and gave amazing annualised returns of 24.6% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 132,000.  Crisil ranked it as Rank-1 and value research online as 4-Star (4 out of 5). One should have such top small cap mutual fund in their portfolio.

#2 – Franklin India Smaller Cos fund


Franklin India smaller cos fund - Top Small Cap Mutual funds to invest in 2016

The scheme aims to provide long-term capital appreciation by investing in mid and small cap companies. Normally, it would invest at least 75 per cent of its assets in smaller companies.

Why should you invest: This is my favorite small cap fund which I have been investing from several years. This small cap fund has outperformed and gave superior annualised returns of 17% in last 10 years and 24% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 127,000.  Crisil ranked it as Rank-1 and value research online as 4-Star (4 out of 5). This is one of the best small cap mutual funds to invest in 2016.

#3 – SBI Magnum Mid-cap Fund


sbi magnum midcap fund - Small Cap Mutual funds to invest in 2016

The scheme aims to provide investors with opportunities for long term growth in capital  by investing in well-diversified basket of equity stocks of Midcap and small cap companies.

Why should you invest: This small cap fund has outperformed and gave superb annualised returns of 15.6% in last 10 years and 23% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 122,000.  Crisil ranked it as Rank-2 and value research online as 4-Star (4 out of 5). One of the good small cap mutual fund to invest now.

You may like: 5 Best Sector Mutual Funds that can triple your money in medium to long term

#4 – Reliance Small Cap Fund


reliance small cap fund - best Small Cap Mutual funds for 2016

This scheme aims to generate capital appreciation by investing in smaller companies. This is just 5 years old scheme. However, in these 5 years, it has beaten its peers with high returns.

Why should you invest: This small cap fund has outperformed and gave amazing annualised returns of 22% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 123,000.  Crisil ranked it as Rank-2 and value research online as 3-Star (3 out of 5). One should have such best small cap mutual fund in their portfolio.

#5 – Canara Robecco Emerging Equity Fund


canara robecco emerging equities fund

The mutual fund scheme aims to generate long term capital appreciation by investing in diversified mid cap stocks that have a potential to emerge as the bigger corporates. For the Purpose of this fund, mid & small companies are defined as those which are ranked from 151 to 500 on the basis of market capitalisation.

Why should you invest: This small cap fund has outperformed and gave higher annualised returns of 17.7% in last 10 years and 21.6% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 117,000.  Crisil ranked it as Rank-2 and value research online as 3-Star (3 out of 5). One can make this fund as part of their portfolio.

#6 – Kotak Emerging Equity Scheme


kotak emerging equity scheme

The scheme seeks to generate long term capital appreciation by investing predominantly in equity and equity related instruments of small cap companies.

Why should you invest: This small cap fund has outperformed and gave amazing annualised returns of 20% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 114,000.  Crisil ranked it as Rank-3 and value research online as 3-Star (3 out of 5). One of the good small cap mutual fund to invest in 2016.

#7 – L&T Mid-cap Fund


l&t midcap fund-top smallcap funds to invest in 2016

The scheme aims to generate capital appreciation by investing primarily in midcap stocks. The investment universe would primarily comprise of companies that have a market capitalization ranging from Rs 300 to Rs 3000 crore, hence we classified under small cap segment.

Why should you invest: This small cap fund has outperformed and gave amazing annualised returns of 17% in last 10 years and 18% in last 5 years. If you would have invested Rs 1,000 per month in this scheme for last 5 years, your investment would have been Rs 60,000 and your investment value would have grown to Rs 108,000.  Crisil ranked it as Rank-3 and value research online as 3-Star (3 out of 5). One should have such best small cap mutual fund in their portfolio.

Also Read: 10 Amazing Mutual fund Schemes that gave highest returns in last 10 years

List of Best Small Cap Mutual funds to invest in 2016


List of Best Small Cap Mutual Funds to invest in 2016

Conclusion: These are some of the top small cap funds one should have in their portfolio. These mutual fund schemes invests in mid-cap to small cap companies and are high risk. If you are high risk to the moderate risk taker, you can invest in these funds.

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Suresh
Best Small Cap Mutual Funds to invest in 2016

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I have done by B.Com from Osmania University and then MBA-Finance from Symbiosis University, Pune. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPOs, reviewing Insurance Products, analysing Health insurance Plans etc.

18 Comments

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  1. hi sir iam 32 age I want to invest 2 lacks lumsum in hdfc mid cap for 5years. my target is 5 lacks.is it right decision or not please suggests me

  2. Dear Sir,

    I am 31 yr old male, moderate risk taker. My goal is long term investment and wealth creation/child education. This is my portfolio in MF.

    1. HDFC top 200 1000pm started-Aug 2014
    2. HDFC Balanced 1000pm started-Aug 2014
    3. HDFC mid cap opp 1000pm started-Aug 2014
    4. Quantum long term eq 1000pm started-Aug 2014
    5. Can Rob Eq tax saver 1000pm started-Aug 2014
    6. ICICI pru foc blue eq 3000pm started-May 2016
    7 SBI pharma fund 2000pm started – May 2016
    8. Axis long term eq tax saver -5000pm started -May 2015

    HDFC top 200 and other funds not performed well in last 2 years. Should I stop further SIP and redeem. also suggest any changes for any fund.

    Thanks
    Vijay

    1. Good funds except for HDFC Top-200. You may exit this mutual fund.

      1. Sir ,I have invested in this MF through Geojit broker, I do not have online access to redeem or switch from MF. How should I stop SIP in this fund. Is there any way to do it online through HDFCMFonline. I have the assigned folio number with me, Thanks

  3. Thank you for providing with so many options of these small cap mutual funds. You explained all these in a perfect way by making it easier for us to understand all these in the best possible way ever. Must say this article is indeed really helpful for the people like me.

  4. Hi Suresh,
    I need to take your suggestion for making portfolio..
    Aim: 12-15 % within next 5 yrs ( july16 to jun21)
    SIP: 8,000 / month
    Portfolio: SBI bluship, Large cap, 2K
    Icici prud. Discovery, Diversified, 2K
    HDFC bal. , Balanced fund, 2K
    DSP Black Rock Micro, small cap, 2K

    my selected funds are ok to get my goal ??
    Thanks in advance

    Gourav

    1. Good funds. However difficult to get good returns in 5 yrs. Invest for 8-10 years atleast.

  5. Hi Suresh

    I am 29 Years old and I invest 7000/- per month in SIP out of which I invest 80% in Mid and Small Cap funds and 20% in Large Cap funds.

    I want to add 2000/- more in SIP but I am confused whether I should invest in Large Cap(SBI Blue Chip) or Diversified Equity (SBI Magnum Multi Cap) Category?

    I have moderate Risk appetite and can keep investing this sum for 4-5 Years.

    I want your suggestion from the diversification point of view.
    Thanks

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