SBI Small Cap Fund: Here're the investment objective and trailing returns

The fund has consistently outperformed the benchmark and its peers

Launched in September 2009 as SBI Small and Midcap Fund, the fund was renamed SBI Small Cap Fund in April 2018 and repositioned as a small-cap fund after the reclassification of mutual funds by the Securities and Exchange Board (Sebi). It featured in the top 30 percentile in the small-cap category of CRISIL Mutual Fund Ranking (CMFR) during the three quarters up to March 2019. R Srinivasan has been managing the fund since November 2013. He has experience of over 26 years. The fund’s assets under management (AUM) more than doubled from Rs 807 crore in July 2016 to Rs 2,258 crore in June 2019.

The investment objective of the scheme is to provide investors with opportunities for long-term growth in capital, along with the liquidity of an open-ended scheme by investing predominantly in a well-diversified basket of equity stocks of small-cap companies.

Trailing returns

The fund has consistently outperformed the benchmark (S&P BSE SmallCap TRI) and its peers (funds ranked under the small-cap fund category in March 2019 CMFR) in all the trailing periods under analysis. An investment of Rs 10,000 in the fund on September 9, 2009 (inception of the fund), would have grown to Rs 50,535 on July 17, 2019, at an annualised rate of 17.86 per cent; a similar investment in the category and the benchmark would have grown to Rs 38,615 (14.69 per cent per annum) and Rs 21,411 (8.03 per cent per annum), respectively. 

A systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals. Monthly investment of Rs 10,000 for the past 10 years in the fund would have grown to Rs 17.35 lakh (20.58 per cent annualised returns) compared to Rs 11.72 lakh (9.47 per cent annualised returns) in the benchmark. 

Portfolio analysis

The fund’s portfolio is predominantly composed of small-cap stocks, averaging 80.38 per cent in the past three years. Allocations to large-cap and mid-cap stocks averaged 2.81 per cent and 10.61 per cent, respectively. 

The portfolio was diversified across 28 sectors in the past three years. The industrial products sector had the highest average allocation of 12.65 per cent, followed by consumer durables (11.72 per cent), consumer non-durables (11.49 per cent) and chemicals (10.74 per cent).

The fund invested in 89 stocks in three years. The highest contributors to the fund’s performance were Graphite India, Orient Refractories, Gabriel India, Solar Industries India, and Westlife Development.