Invest in These Best Small-Cap Mutual Funds for Investment in January 2025
Small-cap funds are a type of mutual fund that invests in small-size companies with a smaller market capitalization that usually ranks below the top 250 listed companies. The fund invests at least 65% of its assets in small-cap companies. Small-cap mutual funds have delivered 26.38% in 2024. The small-cap funds became popular with investors again, obtaining an inflow of Rs.4,111.89 crore in November 2024.
Manu mutual fund managers and experts say that the price of investments is high, but investors can continue their investment in small-cap schemes for wealth creation for a long period. While small-cap funds have seen significant growth in the last six months, investors can still invest in these schemes gradually to build wealth over time.
As per the SEBI norms, small-cap companies face more ups and downs as compared to big companies in the large and mid-cap segments; because of this, small-cap stocks are more risky. The small-cap scheme is more fluctuating, especially in the short term. That is why mutual fund experts suggest that only aggressive investors can invest in small-cap schemes that have a high-risk appetite and a very long investment period.
Why do you invest in small-cap funds?
Small-cap funds have the potential to provide very high returns for a long time. Let’s understand with the example: the small-cap category gave a return of 20% over 10 years. To earn such high returns, you need to be prepared to manage the risks and ups and downs in the market. It is not easy to find successful companies in the small-cap segment. Most of these companies are not well known and are also under-researched.
In short, it is not very easy to invest in these funds, you need to find an experienced fund manager who specialises in small-cap stocks.
Best small-cap funds to invest in January 2025:
- Axis Small Cap Fund
- SBI Small Cap Fund
- Kotak Small Cap Fund
- Nippon India Small Cap Fund
These are the best small-cap schemes you can consider investing in for wealth creation. From these mutual funds. Axis Small Cap Fund has been in the top third quartile for the past 20 months, earlier, the scheme had been in the top fourth quartile for the past two months. SBI Small Cap Fund has been in the top third quartile for the past nine months.
