These small-cap funds beat their benchmark indices in the last one year

In a sign of active management outperforming the passive strategy, only a handful of small-cap mutual funds surpassed the one-year benchmark return of the Nifty Small Cap 250 TRI. As of June 18, 2024, the Nifty Small Cap 250 TRI stands at an impressive 64.06%, but only four mutual funds outperformed this benchmark. This shows the potential for skilled fund managers to add value in the small-cap space, even in a strong market.

Four funds that managed to beat one-year index returns

Bandhan Small Cap Fund

The Bandhan Small Cap Fund - Regular Plan Growth is an open-ended equity fund managed by Bandhan Mutual Fund, focusing on small-cap stocks. Launched on February 25, 2020, it benchmarks against the S&P BSE 250 SmallCap TRI. As of May 31, 2024, the fund has a Total Expense Ratio (TER) of 1.8% and manages assets worth ₹5,165.54 crore. The fund requires a minimum investment and top-up amount of ₹1,000 each. It has a turnover rate of 87% and an exit load of 1% if redeemed within a year. The NAV as of June 18, 2024, is ₹40.407. Since its inception, the fund has achieved a Compound Annual Growth Rate (CAGR) of 38.24%, outperforming its benchmark's 12.66%.

Investing ₹10,000 monthly in the Bandhan Small Cap Fund - Regular Plan Growth through a SIP from June 18, 2023, to June 18, 2024, would have yielded a return of 69.47% which made a corpus of ₹1,70,480. In comparison, the NIFTY 50 TRI index returned 27.09% and gold returned 28.71%.

ITI Small Cap Fund

The ITI Small Cap Fund - Regular Plan - Growth Option, launched by ITI Mutual Fund on February 17, 2020, is an equity mutual fund focused on small-cap stocks. It follows the NIFTY Smallcap 250 TRI as its benchmark. The fund has a Total Expense Ratio (TER) of 1.95% as of May 31, 2024. It is an open-ended scheme with a minimum investment requirement of ₹5,000 and a minimum top-up of ₹1,000.

The fund's total assets amounted to ₹2,034.11 crore as of May 31, 2024, with a turnover rate of 124%. There is an exit load of 1% if redeemed within 12 months. As of June 18, 2024, the Net Asset Value (NAV) is ₹27.40. Since its inception, the fund has achieved a Compound Annual Growth Rate (CAGR) of 26.17%, outperforming its benchmark, which has a CAGR of 17.23%.

If you had invested ₹10,000 every month in the ITI Small Cap Fund - Regular Plan - Growth Option from June 18, 2023, to June 18, 2024, you would have seen a return of 66.63% accumulating a corpus of ₹1,72,823. In comparison, the NIFTY 50 TRI provided a return of 27.09%, gold gave a return of 28.71%, and the Public Provident Fund (PPF) yielded 7.10% over the same period.

Quant Small Cap Fund

The Quant Small Cap Fund-Growth - Regular Plan, formerly known as Escorts Income Bond-Growth, is an equity mutual fund launched on November 24, 1996, by Quant Mutual Fund. It focuses on small-cap stocks and follows the NIFTY Smallcap 250 TRI benchmark. As of May 31, 2024, the fund has a total asset value of ₹21,242.79 crore and a Total Expense Ratio (TER) of 1.63%. The minimum investment required is ₹5,000, with additional investments starting at ₹1,000.

The fund is open-ended, meaning you can invest and withdraw at any time, but there is a 1% exit load if you redeem within one year. As of June 18, 2024, the NAV is ₹266.69. Since its inception, the fund has delivered a Compound Annual Growth Rate (CAGR) of 13.6%, while the benchmark has achieved 17.23%.

The Quant Small Cap Fund has provided impressive SIP returns. If you started with ₹10,000 on June 18, 2023, and continued with monthly investments until June 18, 2024, you would have seen a return of 66.52% turning investment value to ₹1,70,326. In comparison, the NIFTY 50 TRI index gave a return of 27.09% and gold yielded 28.71%.

Mahindra Manulife Small Cap Fund

The Mahindra Manulife Small Cap Fund - Regular Plan - Growth, launched on December 5, 2022, by Mahindra Manulife Mutual Fund, focuses on small-cap equities. It is an open-ended scheme with a total asset value of ₹4,131.27 crore as of May 31, 2024. The fund's Total Expense Ratio (TER) is 1.82%. It has a minimum investment and top-up requirement of ₹1,000 each and an exit load of 1% if redeemed within three months.

As of June 18, 2024, the net asset value (NAV) was ₹19.05. The fund has achieved a Compound Annual Growth Rate (CAGR) of 52.95% since its inception, significantly outperforming its benchmark, the S&P BSE 250 SmallCap TRI, which has a CAGR of 12.66%. The turnover rate is 67%.

Investing ₹10,000 monthly in the Mahindra Manulife Small Cap Fund from June 18, 2023, to June 18, 2024, would have given you a return of 65.85% with a total value of ₹1,68,246. In comparison, the NIFTY 50 TRI gave a return of 27.09% and gold returned 28.71%.

The strong performance of these funds highlights the value skilled fund managers can add in the small-cap category, surpassing both their benchmarks and category averages. Investors seeking high growth in small caps should consider these top performers, which have consistently outshone broader market indices and passive strategies.