A proven performer: Nippon India Small Cap Fund delivers big returns

Launched in September 2010, the Nippon India Small Cap Fund has consistently ranked in the top 30 percentile of the smallcap fund category in the CRISIL Mutual Fund Ranking (CMFR) for four consecutive quarters through June 2024.

As of June 2024, the fund’s assets under management totalled Rs 56,469 crore, up from Rs 15,353 crore in June 2021.

Samir Rachh has managed the fund since January 2017. The primary objective of the scheme is to generate long-term capital appreciation by predominantly investing in equity and equity-related instruments of smallcap companies. The secondary objective is to achieve consistent returns through investments in debt and money market securities.

Trailing returns

The fund has outperformed the benchmark (Nifty Smallcap 250 TRI) over the past six months, as well as in the two-, three-, five-, seven-, and 10-year trailing periods. It has also surpassed its peers (funds ranked under the smallcap category in the June 2024 CMFR) over the past six months and in the one-, two-, three-, five-, seven-, and 10-year trailing periods.

An investment of Rs 10,000 in the fund on September 16, 2010 (its inception) would have grown to Rs 1.81 lakh on September 12, 2024, reflecting an annualised return of 23 per cent. In comparison, the same investment in the category would have grown to about Rs 1.05 lakh (18.4 per cent annualised return) and in the benchmark, to Rs 68,774 (14.8 per cent annualised return).

A systematic investment plan (SIP) is a disciplined investment method offered by mutual funds, allowing for regular investments. A monthly SIP of Rs 10,000 over the past 10 years, totalling Rs 12 lakh, would have grown to Rs 50.66 lakh (27.34 per cent annualised returns), compared to Rs 38.63 lakh (22.29 per cent annualised returns) in the benchmark as of September 12, 2024.

Portfolio analysis

In the past three years, the fund has maintained a predominant allocation to smallcap stocks, aligning with its investment objective. The average exposure to smallcap stocks was 68.05 per cent, while midcap and largecap stocks averaged 16.94 per cent and 11.83 per cent, respectively.

During the same period, the portfolio was diversified across 29 sectors. The capital goods sector had the highest average allocation at 17.96 per cent, followed by financial services (13.56 per cent), chemicals (9.85 per cent), fast-moving consumer goods (7.18 per cent), and information technology (6.68 per cent).

The fund was exposed to 331 stocks over the past three years and consistently held 79 of them. Major contributors to the fund’s performance included APAR Industries, Tejas Networks, Voltamp Transformers, Hindustan Aeronautics, and Kirloskar Brothers.