Year-end special: Small mutual funds will give 4% returns in 2022 | Jobs Vox

In 2022, the active small-cap schemes offered an average return of 4.19%. The small cap category has 23 active schemes. Mahindra Manulife Small Cap Fund is a new entrant to the category. The NFO period ends on December 5, 2022.

According to ACE MF data, two popular small cap benchmarks – Nifty Smallcap 250 – TRI and S&P BSE 250 Small Cap – TRI – have delivered returns of 0.30% and 2.22% respectively. Simply put, the category has delivered higher average returns than the benchmark indices.

SBI Small Cap Fund was the highest among active funds, returning around 11%. Tata Small Cap Fund and Quant Small Cap Fund have delivered double digit returns. Nippon India Small Cap Fund and Canara Robeco Small Cap Fund offered more than 9 percent.

The small cap fund category had four passive schemes. By 2022, all four passive plans have experienced negative returns. Aditya Billa Sun Life Nifty Smallcap 50 Index Fund lost 16.41% and Nippon India Nifty Smallcap 250 Index Fund lost 2.49% in 2022, according to data from Value Research.

Out of 23 small cap schemes, 14 schemes beat their benchmark. Four schemes provided returns in line with the benchmark, and five schemes underperformed the index.

In 2022, five active small cap schemes offered negative returns. IDFC Emerging Business Fund lost 4.22%, Aditya Birla Sun Life Small Cap Fund lost 3.48%, ITI Small Cap Fund lost 2.03%, Kotak Small Cap Fund lost 0.69% and PGIM India Small Cap Fund lost 0.09%.

Between January and November 2022, small cap schemes received revenue worth Rs 17,550.60 crore. These schemes attracted an inflow of Rs 3,832.00 crore by 2021.

Top 10 Small Cap Plans in 2022
Program name YTD Returns (%)
SBI Small Cap Fund 11.28
Tata Small Cap Fund 10.10
Quant Small Cap Fund 10.01
Nippon India Small Cap Fund 9.68
Canara Rob Small Cap Fund 9.52
ICICI Pru Smallcap Fund 8.31
IDBI Small Cap Fund 8.16
HDFC Small Cap Fund 6.54
Franklin India Small Cos Fund 6.50
Axis Small Cap Fund 5.20
In 2022, plans that led to negative reactions
IDFC Fund for Emerging Businesses -4.22
Aditya Birla SL Small Cap Fund -3.48
ITI Small Cap Fund -2.03
Kotak Small Cap Fund -0.69
PGIM India Small Cap Fund -0.09

Source: ACE MF, returns as of December 6, 2022

Small mutual funds had a tough year in 2022 as the market faced a lot of uncertainties related to high inflation and interest rates in India and globally. Fears of a recession in the global economy kept the market on edge. The small cap segment suffers a lot when the market falls into a rough phase. The small cap segment may be under pressure in the coming months. However, investors should remember that these plans are good when the sentiment is positive. They also have the potential to provide high returns over the long term.

Small cap schemes are considered risky and volatile and are recommended for aggressive investors with a very long investment horizon. Investors should invest in small-cap mutual funds only if they value volatility and have a long investment horizon. New investors should not invest in these schemes expecting high returns based on historical returns.

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