Today we talk about HDFC Small Cap HDFC Small Cap Fund. This fund has earned a big name in recent years. This name has come from giving returns of the fund. This small cap fund has given returns of more than 106% on one year deposits. But its return has been 16 percent in three years and 18 percent in 5 years. The returns are really high throughout the year but the risk appetite is high. If the same investment is made for 3 years or 5 years, then with less risk, double the returns can be availed from the fixed deposits of banks.
If we look at the record of the last one year, the small cap fund has given returns around 70 percent. There is also an HDFC small cap fund in this. However, if we look at the figures of the last three years, the small cap fund has earned only 7.47 percent. Small cap funds fall under the category of equity mutual funds which invest most of their money in small companies. That is, those companies which are up to or below 251 in terms of stock market. Such companies are small in size and are new. These companies try to make money by launching new products in the market, which also benefits the fund. Similar companies later convert into mid cap or large cap, if their performance is of that level.
About HDFC Small Cap Fund
HDFC small cap fund also invests 65% of its money in such companies. The AUM or Asset Under Management of this company is Rs 12,460 crore. The fund is listed under Nifty Smallcap 100 Total Return Index. The Net Asset Value NAV of this fund is Rs 68.204. IDCW is Rs 32.631. You can invest a minimum of Rs 5,000 in this. If a customer wants, then he can start investing with a minimum SIP of Rs 500. The name of the manager of this fund is Chirag Setalvad. If we look at the portfolio sector of this fund, the first place is the service sector, in which this fund has invested 20.42 percent. The second place is chemical sector with 13.16 percent, technology sector in third place with 9.45 percent, construction sector in fourth place with 8.07 percent and finally engineering sector in which 7.78 percent investment has been made.
In which sector did HDFC small cap money go?
The money of this fund is mainly invested in five sectors Services, Chemical, Technology, Construction and Engineering. This is the reason that despite being a small cap fund, it has given better returns to the customers. These five sectors are such whose demand always remains. Will continue even if corona or some other epidemic comes. In such a situation, there is a possibility of further growth of this fund in future. Talking about companies, HDFC small cap has the highest investment in Firesource Solutions, Bajaj Electricals, Sonata Software, Persistent Systems and Chambal Fertilizer & Chemicals. These companies may be small in their turnover, but their profit record is very good. HDFC Small Cap Fund also gets the benefit of this well.
Recent changes in the fund
There have been many major changes in this fund recently. Companies like Hathway Cable and Datacom have entered this fund. On the other hand, companies like Atul, JB Chemicals & Pharmaceuticals, Time Technoplast have exited. Federal Bank, Radico Khaitan, LG Balakrishnan, Superjit Engineering, Aster DM Healthcare, Inox Leisure, Gabriele India, Vardhman Textiles, DCB Bank and Equitas Small Finance Bank have increased their stake. Since its inception in 2008, the fund has given an average return of over 13%.
Let us also understand the tax fund of this fund. If you sell the units of this fund before 12 months, then the income earned on it will be taxed at 15% under short term gains. If you hold its unit for more than 1 year, then the income earned on it will also be taxed. This will attract a tax of 10% under Long Term Gains. Keep in mind that this 10% tax will be applicable only if in a year more than Rs 1 lakh has been earned from this fund.
Invest or not
This fund invests money in small companies, so there is a lot of risk in it. Small cap funds have higher volatility as compared to long cap and mid cap funds. This fund is considered right for those who want to invest their money in small companies. Whatever portfolio you make, the investment of small cap funds in it should be less because in case of any major event in the market, it becomes difficult to sell the shares of the smaller companies involved.