September 29, 2020

BEST SMALL CAP MUTUAL FUND TO INVEST IN 2020

By Roy

Every bull market climbs through the wall of worries. After a lull of 3 years, small caps are ready to roar again. The best way to participate in the forthcoming rally is to invest in the best small cap mutual fund. Every Fund house has its own small cap fund with a dedicated research team. Few good small cap funds are HDFC Small Cap Fund, Kotak Small Cap Fund, Nippon Small Cap Fund, Axis Small Cap Fund. But I have selected SBI Small Cap Fund as the Best Small Cap Fund to invest in 2020.

SBI Small Cap Fund Snapshot

Fund House:SBI Mutual Fund
Launch Date:09-09-2009
Return Since Launch:17.28
Benchmark:S&P BSE Small Cap TRI
Riskometer:Moderately High
Type:Open-ended
Assets:Rs. 5,039 Cr (As on 31-Aug-2020)
Expense:1.88% (As on 31-Aug-2020)
Return Grade:High
Turnover:42%

Turnover is a measure of portfolio churn. It means, in a single year, how much of the fund portfolio has been changed. Lower turnover means, Fund manager has conviction in his stocks and he prefers to sit for long on them. Higher turnover means, Fund manager is busy in trading activities. High turnover adds to the cost of the fund and reduces NAV and return.

Fund Manager Details

Mr. R Srinivasan: R Srinivasan joined SBI Funds Management as a Senior Fund Manager in May 2009; he is now the Head of Equity and also directly manages a number of funds. He has an experience of more than 25 years in equities having worked with Future Capital Holding, Principal PNB, Oppenheimer & Co (later Blackstone), Indosuez WI Carr and Motilal Oswal, among others. Srinivasan is a post graduate in Commerce and has an MFM degree from the University of Mumbai. His total experience is 26 years.

The views are personal, but I have to admit that he is my favourite Fund Manager and Stock-picker.

SBI Small Cap Fund Portfolio

Name of the Instrument / IssuerRating / IndustryMarket value
(Rs. in Lakhs)
% to AUM
a) Listed/awaiting listing on Stock Exchanges
Elgi Equipments Ltd.Industrial Products242664.82
PI Industries Ltd.Pesticides21096.354.19
JK Cement Ltd.Cement19442.783.86
Blue Star Ltd.Consumer Durables18438.23.66
City Union Bank Ltd.Banks175503.48
Techno Electric & Engineering Company Ltd.Construction Project17352.43.44
Hawkins Cookers Ltd.Consumer Non Durables16903.743.35
Hatsun Agro Product Ltd.Consumer Non Durables15915.363.16
Navin Fluorine International Ltd.Chemicals15420.413.06
Tube Investments of India Ltd.Auto Ancillaries14901.72.96
Carborundum Universal Ltd.Industrial Products14286.152.83
Lemon Tree Hotels Ltd.Hotels142502.83
Chalet Hotels Ltd.Hotels140672.79
The Great Eastern Shipping Company Ltd.Transportation13797.682.74
Dixon Technologies (India) Ltd.Consumer Durables13761.422.73
Timken India Ltd.Industrial Products13133.772.61
V-Guard Industries Ltd.Consumer Durables12882.12.56
Narayana Hrudayalaya Ltd.Healthcare Services11969.52.38
Relaxo Footwears Ltd.Consumer Durables11797.22.34
CSB Bank Ltd.Banks11761.752.33
Rossari Biotech Ltd.Chemicals11180.662.22
Triveni Turbine Ltd.Industrial Capital Goods10559.822.1
Engineers India Ltd.Construction Project10496.282.08
Fine Organic Industries Ltd.Chemicals10178.752.02
Star Cement Ltd.Cement10163.62.02
Sheela Foam Ltd.Consumer Durables10000.351.98
Galaxy Surfactants Ltd.Chemicals8726.51.73
Alembic Ltd.Pharmaceuticals85151.69
eClerx Services Ltd.Software8471.661.68
Info Edge (India) Ltd.Software8132.721.61
GE T&D India Ltd.Industrial Capital Goods7955.081.58
Grindwell Norton Ltd.Industrial Products7158.711.42
Kirloskar Oil Engines Ltd.Industrial Products5858.581.16
Agro Tech Foods Ltd.Consumer Non Durables4789.630.95
V-Mart Retail Ltd.Retailing4648.030.92
Ratnamani Metals & Tubes Ltd.Ferrous Metals4534.260.9
Kewal Kiran Clothing Ltd.Textile Products4130.190.82
Garware Technical Fibres Ltd.Textiles - Synthetic3861.960.77
JSW Energy Ltd.Power3080.780.61
VST Industries Ltd.Consumer Non Durables2995.630.59
Tamil Nadu Newsprint & Papers Ltd.Paper2625.650.52
Kalpataru Power Transmission Ltd.Power2564.050.51
Disa India Ltd.Industrial Products2497.920.5
Rajratan Global Wire Ltd.Auto Ancillaries2286.040.45
Thangamayil Jewellery Ltd.Consumer Durables2124.960.42
Ashiana Housing Ltd.Construction1889.480.37
Finolex Industries Ltd.Industrial Products1270.230.25
Fairchem Organics Ltd.Chemicals613.410.12
Total474303.4494.11
b) Unlisted
Shreno Ltd.Construction1403.710.28
Total1403.710.28
TREPS18841.93.74
Total18841.93.74
Other Current Assets / (Liabilities)
Margin amount for Derivative positions112802.24
Net Receivable / Payable-1904.13-0.37
Total9375.871.87
GRAND TOTAL (AUM)503924.92100

Portfolio Distribution

Sector allocation compared to Aggregate Small Cap Funds

Performance of SBI Small Cap Fund

Returns:

Few Key-points before Investing

  • The Fund has Exit Load of 1% on redemption before 1 year.
  • The minimum investment is Rs. 5000 and minimum additional investment is Rs. 1000. Minimum SIP is Rs. 100.
  • Small Cap investing is a bit of a high risk game. It is advisable to have longer time horizon of 3-5 years while investing in Small Cap funds.
  • I have a regular SIP in SBI Small Cap Fund. In the month of February, during the COVID fall, I have further invested a lumpsum amount in this Fund. So, I have a vested interest in this Fund.
  • My Lumpsum investment performance: It is giving 77%CAGR as on 28.09.2020.

I am not a SEBI registered advisor. Kindly consult your financial advisor before investing.

Data Source – SBI Mutual Fund Website, AMFI, Valueresearch