HDFC Small Cap Fund Direct-Growth is a small cap high risky mutual fund in the market for the last 10 years in the market. HDFC Mutual Fund has 6,27,955 Crores assets under management.
HDFC started its mutual fund business back in 1999 with 500 Crores AUM. HDFC Bank is one of the largest banks in India with the best and lowest service cost.
Why Small Cap Funds Is Best For Investments ?
Small Capitalization means less than 5,000 Crores in market value. Small cap is those companies they having very high growth potential but high risk because they grow at higher speed than other companies.
Generally, investors and traders buy large-cap mutual funds for long-term investment but they get less stable returns on their investment value because large cap mutual funds have big and stable companies in their portfolio and they grow at lower rate.
For example, APPLE will not grow in the future at 50% CAGR because APPLE is already in trillions, and making trillions within a year is very hard to achieve.
Taking another example of Happiest Minds Tech is a small cap IT company with having $2 Billion market cap they can grow their market cap to $20 billion in the next ten years.
When it comes to mutual fund investment, small cap funds outperformed large caps. They manage their fund and change holding from time to time. Which mutual fund is best in the small cap category ?
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HDFC Small Cap Fund Direct Growth
As of now, HDFC Small Cap fund has 140 rupees of NAV with a 2-star rating. The Minimum investment amount is 100, you can started with SIP or One time. Currently, the fund has 29,000 Crores in market size.
They have more allocation in the services and technology sector, fund managers know how to invest in growing sectors.
The Expense ratio is low as compared to the industry average which is 0.66% currently with zero exit load. Exit load is when you sell your mutual fund before your time horizon then they charge you extra money.
Dhruv Muchhal and Chirag Setalvad completed their career with MBAs from top universities. They have very good track records of managing and growing fund size.
HDFC fund gave investors 22 % CAGR returns annually. Some times people invest in small caps based on rating and past returns but they do not give you a sure-shot view of what happen in the future.
Sonata Software, Firstsource Solutions, Bank of Baroda and eClerx Services control 15% of their portfolio. Nippon India Small Cap Fund delivered 35% returns in the last three years but they hold more stocks than HDFC mutual fund.
More stocks in the portfolio means fewer returns because they average each other stocks returns. Nippon and ICICI hold more than 100 companies while HDFC holds 75 stocks.
One year’s return of this fund is higher than others and that is 53% in the last financial year 2023. If you invest One lakh in the last five years today it would become 2,93,281.
Which One is Better SIP or One Time Investment ?
While investing in small cal funds we suggest you to choose SIP, because when you invest in lumpsum and suddenly in the market crashes then your invest is in red, and if you want to add more then you can’t.
But when you do SIP every month then your investment amount is averaged out with NAV and gives you more stable returns.