Overview of SBI Small Cap Fund
Imagine you invested your money and it achieved 2X higher returns. This looks hard but SBI Small Cap Fund delivered this growth to investors.
It is a small-category mutual fund that started in the year 2009. It is one of the top schemes of SBI Mutual Fund Company that generates higher growth for investors. The reason behind its growth in the past is its investing strategy. It focuses on investing in small-sized companies that can become mid-cap tomorrow. The fund holds a strong position in the mutual funds market by delivering great results.
Its growth potential makes it a great choice but the question is how it can help you to achieve the same growth. Let’s find out and see its investing strategy, advantages and how it is a safe investment for you.
Investment Strategy of SBI Small Cap Fund
The fund follows a high-growth investing strategy to generate long-term capital appreciation. It ensures the use of strategies that help the fund to achieve the high growth returns goal.
It focuses on investing in quality small-cap stocks that have higher growth potential. To identify profitable stocks, the fund uses bottom-up stock selection. A team of fund managers evaluates every single company based on past performance, business style and growth potential. Even as a small cap fund, it prioritises risk management strategies to mitigate the risk. It diversifies its portfolios into different sectors which helps to reduce the risk.
The fund invests a large number of assets in small cap stock but it does not mean it only targets small cap stocks. It allocates a small percentage of its assets in mid and large cap funds. To understand better, it invests 65% of its assets in small cap, 10-20% in mid and large cap and 10% in debt instruments.
This strategy helped the SBI small cap fund returns to grow over time and delivering an annual growth rate of 23.69% of all time.
What are the Advantages of SBI Small Cap Fund?
The SBI small cap scheme stands out as a top investment scheme in small cap space by providing several advantages. Here are some of the major advantages of the fund:
1. SIP Investment
You get an affordable way to invest in the fund because it provides an SIP plan. It helps you to start investing by investing a fixed amount at set times. It helps to start investment easily and reduce the volatility risk.
2. Early Investment in Growing Companies
The best way to boost your investment returns is by investing in companies that can grow in future. The fund helps to invest in those growth sectors by identifying companies that are in their early growth stage.
3. Easy to Calculate Returns
You can easily calculate your systematic investment plan returns by using the SBI small cap fund calculator. It helps you to estimate how much your investment value will be in future when you invest in SBI small cap scheme through a systematic plan.
4. Lower Expense Ratio
The SBI small cap scheme comes with a lower expense ratio. When you invest in the fund, you have to pay the expense ratio of 1.65% which is lower compared to other mutual funds and justified with its potential of delivering higher growth.
Who is the Fund Manager of SBI Small Cap Fund?
The SBI small cap fund is managed by an experienced fund manager R. Srinivasan. He has been managing the fund since 2009 and comes with 30 years of incredible experience. At present, he holds the position of chief investment officer of SBI Mutual Fund.
He has a strong knowledge of equity research and portfolio management. He focuses on selecting quality stocks that can generate long-term returns. He uses a bottom-up stock selection that helps him identify profitable stocks. To reduce the risk, he also diversifies portfolios into different sectors.
His growth investing strategy and effective risk management helped the grow SBI small cap fund returns over time. On one side, where the fund gained popularity, he won the trust of many investors.
How is SBI Small Cap Fund a Safe Investment?
The small cap fund category is considered a high-volatile due to its focus on small companies. But do you know why the SBI small cap scheme stands out as a safe investment choice? Here are a few reasons:
1. Diversified Portfolio
The fund diversifies its portfolio into different sectors such as industrial products, consumer durables and finance. This helps to reduce the risk and achieve sectoral growth whenever any sector performs well.
2. Regular Investing
The fund gives you an opportunity to invest through a systematic investment plan. This plan helps you to invest at regular intervals which helps to reduce the volatility risk. You can also use the SBI small cap fund calculator to estimate future returns.
3. Professional Fund Management
Instead of passive management, the fund uses active fund management. A team of experts actively manages your portfolio and adjusts it whenever changes are needed. This helps reduce the risk by adjusting funds before it gets too late.
Who Should Invest in SBI Small Cap Fund?
The SBI small cap fund is a great investment choice for investors but due to its highly volatile nature, it is best suitable for these investors:
1. Investors with High-Risk Tolerance
The fund has to face higher volatility due to its higher focus on small-cap stocks. The volatility sometimes causes low performance in the short term. If you have a higher risk tolerance and manage short-term losses, then investing in the fund is a great choice.
2. Long-Term Investors
As you know, the fund focuses on investing in small-cap stocks which have the record to provide higher returns in the long term. If you are planning to invest for 5-7 years or starting an SIP, then you can make high returns for your future.
3. High Return Seekers
If you are an investor who wants to build a strong wealth that helps you to achieve your future goals, then investing in the fund will be beneficial for you. It focuses on investing in quality stocks that have a great past performance and provide high returns in future.
Final Thoughts
In short, the SBI small cap fund investing strategy and past performance proved its growth potential. It allows yo to build a strong wealth by investing for a long time. However, it is also important to consider that the fund has to face high volatility to achieve profit. If you can take high risks and manage losses, then the fund will help you to achieve growth.
If you are looking for a low-risk option, then you should start an SIP. It is a systematic plan that helps you invest a fixed amount at set times and grow wealth with compounding. By starting this plan, you can not only build wealth but also reduce the volatility risk. So if you want to leverage growth with lower risk, then this plan is the best option for you.
