Nippon India Small Cap Fund Review – Should You Invest?

Nippon India Small Cap Fund Review – Should You Invest?

Nippon India Small Cap Fund (Previously Known as Reliance Small Cap Fund) is a Small Cap Fund which was started in Sept 2010.

Fund Information

AMC – Nippon India Mutual Fund (Previously known as Reliance Mutual Fund) which is the 5th Biggest Asset Management Company in India

Scheme Type – Open-Ended Fund

Launch Date – 16th Sept’ 2010

Investment Objective – The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity-related instruments of small-cap companies and the secondary objective are to generate consistent returns by investing in debt and money market securities.

Benchmark – S&P BSE Small-Cap TRI

AUM – Rs.8,435 Crores (As on 30th Nov’ 2019)

Fund Manager – Samir Rachh (Since 2017)

Expense Ratio

  • For Regular Plans – 2.06%
  • For Direct Plans – 1.25%

Minimum SIP Amount – Rs.100 p.m.

Minimum Investment (Lumpsum – First Time) – Rs.5000

Minimum Investment (Subsequent Purchase) – Rs.1000

Scheme Performance

Trailing Returns (%) as on 17th Dec’19
ParticularYTD1 Month3 Months1 Year3 Years5 Years
Fund-3.90-0.944.74-3.699.9112.11
S&P BSE Small-Cap TRI-7.960.554.41-6.914.285.87
Category-2.21-0.325.29-1.397.309.56

Source – Value Research Online

Value of Rs.10,000 SIP Started in this fund
Time PeriodInvestment (Rs.)Investment Value (Rs.)Absolute Returns (%)Annualised Returns (%)
1 Year1,20,0001,18,775-1.02-1.89
2 Years2,40,0002,22,741-7.19-7.01
3 Years3,60,0003,47,548-3.46-2.27
5 Years6,00,0007,00,01016.676.11

Source – Moneycontrol

Investment Portfolio

Asset Allocation
Nippon India Small Cap Fund - Asset Allocation.
Top 10 Stock Holdings
Sr No.Company% of Total Assets
1CreditAccess Grameen3.23
2Deepak Nitrite2.99
3Orient Electric2.41
4Tube Investments of India2.39
5HDFC Bank2.19
6Affle India2.18
7Zydus Wellness2.00
8Birla Corporation1.91
9Tata Global Beverages1.88
10Navin Fluorine International1.80
Total22.98
Top 5 Sector Holdings
Sr No.Sectors% of Total Assets
1Chemicals9.44
2Household7.73
3Private Banks5.13
4NBFC4.26
5Misc.4.17
Total30.73

Risk Measurement Parameters

ParticularsStandard DeviationSharpe RatioBetaAlpha
Fund18.520.240.905.51
S&P BSE Small-Cap TRI19.650.01
Category17.170.020.801.52

Source – Value Research Online

Also Read – What is Standard Deviation, Sharpe Ratio, Beta and Alpha in Mutual Funds?

Risk Analysis

As we can see the fund has higher SD than Category but lower than Benchmark, so the fund get outperform category but not the benchmark. The fund has a higher Sharpe Ratio than the benchmark and category which means the fund has better risk-adjusted returns. The beta of the fund is less than 1 which means the fund is less volatile but the beta of the fund is higher than the Category. Alpha of the fund is 5.51 which means the fund has better chances of outperforming its Index and the Alpha of the fund is also better than the benchmark.

Should You Invest in Nippon India Small Cap Fund?

Looking at Fund’s Trailing Performance we can say that fund has underperformed in the short term but the long term returns (5 Years or more) are very good and has outperformed both benchmark and category. Fund has 95% Allocation to Equity with 22.98% of AUM in Top 10 Stocks, Sector Allocation is also good with Top 5 Sectors Contributing 30.73% of AUM. Risk Analysis also shows that the fund has the strength to generate Excellent Returns and Outperform benchmark and Category both.

Investors with Risk Appetite and Long Term of view of At least 5 Years or more should definitely invest in this fund. Investing through SIP is an excellent way to invest in Mutual Funds. Also, Avoid Investing for Short Term as the fund is more volatile and underperform in the Short Term.

Also, Investors who are already invested in this fund would have seen negative returns, but they should not be worried about short term volatility and have a long term view. The fund is among Top 5 Small-Cap Funds in India and Investors Should Invest with a long term view.

Bonus Tip – Whenever you are investing in Mutual Funds, Always Invest through Direct Plans and Avoid Regular Plans. You can check out the difference between Direct vs Regular Plans and How to Switch from Regular to Direct Plans.

Hope you liked the Review of Nippon India Small Cap Fund and If you have any question do let us know in the Comments Section Below & Thank You very much for reading.

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