Two of the most popular small-cap funds in the market today have restricted inflows. Which means, you cannot invest an unlimited amount of money in them.

Recently, the retail investor has been investing money into small and mid-cap funds owing to their strong performances.

Reliance Small Cap Fund recently limited inflows to the fund. You cannot invest a lump sum in the fund. Only SIP can be started in it.

Invest in direct mutual funds

  • Enjoy 0% commission
  • SIP starting at ₹500

And through the systematic investment plan (SIP) mode, from May 16.

Henceforth, the fund will be called SBI Small Cap Fund and will have an investment limit of ₹25,000 per month and per PAN card.

The subscription was closed since the fund had a capacity constraint of Rs. 750 crore. After many small-cap funds have been putting restrictions on accepting fresh funds due to rising inflows and limited investment opportunities, SBI Small Cap is the first fund to reopen for fresh investments.

A comparison of both these funds will give a clear picture to the investors for making the choices.

Which Gives Higher Returns: Reliance Small Cap or SBI Small Cap Fund

Objectives of Investment

Reliance Small Cap Fund

Generating long-term capital appreciation through predominantly investing in equity and equity related instruments of small cap companies.

SBI Small Cap Fund

It provides opportunities for long-term growth in terms of capital with the liquidity of an open-ended scheme through predominantly investing in a well-diversified number of equity stocks, in small-cap companies.

It is evident that both the funds have a similar objective of investment. The risk is similar too.

You can also read how to reduce losses when invested in small-cap funds

Key Details

ParticularsKey Details of Reliance Small Cap FundKey Details of SBI Small Cap Fund
Fund HouseReliance Mutual FundSBI Mutual Fund
Scheme BenchmarkS&P BSE Small Cap IndexS&P BSE Small Cap Total Return Index
CategorySmall CapSmall Cap
Inception DateAugust 2010July 2009
Face Value (Rs/ Unit)10.0010.00
Total Fund Size (in Rs Cr.)6571.75873.82
Fund ManagerDhrumil Shah (Since: Feb, 2018)

Samir Rachh (Since: Jan, 2017)

R. Srinivasan (Since: Nov, 2013)
Availability of SIPYesYes
Minimum Initial Investment5000/-5000/-
Management Fee1.251.25
Expense Ratio2.002.32
CEOSundeep SikkaAnuradha Rao

Reliance Small Cap vs SBI Small Cap: Investment Strategy

Both Reliance Smallcap Fund and SBI Small & Mid Cap Fund are open-ended schemes which give flexibility to the investors. The schemes aim for long-term capital appreciation for the investors.

The managers after careful analysis of the macroeconomic factors and the sector of operations of various companies determine the best company to invest in, based on their valuation and investment rationale.

Being a small cap focused fund, both the schemes fall into the category of high risk, high return.

Both schemes have asset allocation as follows:

Reliance Small Cap Fund

SBI Small Cap Fund

Fund Manager of Reliance Small Cap Fund

Mr. Samir Rachh has graduated in B.Com (H) from V.G.Vaze College, Mumbai. Prior to joining Reliance Mutual Fund, Mr Rachh has worked in Hinduja Finance, Emkay Research, and Anvicon Research. He has a professional experience of over 25 years. Few of the funds by him are:

Mr. Dhrumil Shah has graduated in and obtained the degree of Chartered Accountancy. Prior to joining Reliance Mutual Fund, he has worked with Birla Sun Life Insurance as AVP Investments, Equity Fund Management and Research and ASK investment Managers as Portfolio Manager, Equity Fund Management and Research. Few of the funds managed by him are:

  • Reliance Capital Builder Fund IV Series C – since Feb 2018
  • Reliance Capital Builder Fund IV Series D – since Feb 2018

Fund Manager of SBI Small Cap Fund

Srinivasan has completed post-graduation in M.Com and MFM. Prior to joining SBI, he has worked with Principal PNB AMC, Oppenheimer & Co, Indosuez WI Carr, and Motilal Oswal. Few of the funds managed by him are:

Investment Philosophy

Both the funds aim at generating risk-adjusted returns, by investing in small-cap equity and equity-related securities. Small cap stocks are equities, whose market capitalization value stands below the top 250 companies.

The approach of the investment is to adopt prudent risk management measures, like diversification and margin of safety to generate high returns for the investors.

Small cap funds offer twin advantage, which is, it offers high growth prospects and relatively lower valuation. However, a high return has high risk associated with it.

An investor considering to put in money in either of the two funds should consider the following points:

  • The historical performance and return of both the funds as stated above in the returns heading
  • The portfolio section and the weight given by the funds for its investments
  • If an investor is willing to invest a big amount and SBI Small Cap Fund may not prove to be a good option, due to its limitation of 25,000
  • Finally, the risk-taking ability of the investor.

Which Fund to Invest in Instead of SBI and Reliance Small Cap?

Reliance Smallcap Fund and SBI Smallcap Fund are not the only good small-cap mutual funds available.

Here are some good small-cap mutual funds that are similar to SBI Small Cap Fund and Reliance Small Cap Fund.

1. L&T Emerging Business Fund

Launched in April 2014 this fund is a small cap equity oriented mutual fund with a high risk and high return. The key details of the fund are:

Launch DateApril, 2014
Fund CategoryEquity Oriented – Small Cap
Asset Under Management (AUM)Rs. 4145.21 Cr
Scheme TypeOpen Ended
Scheme BenchmarkS&P BSE Small Cap Total Return Index
Investment ObjectiveGenerating long term capital gain appreciation by predominantly investing in a diversified equity funds
Face Value (Rs/Unit)10.00
Fund ManagersKaran Desai (Since: Feb, 2017)

Soumendra Nath Lahiri (Since: Apr, 2014)

Expense Ratio2.01
Fund HouseL &T Mutual Fund

The NAV of L&T Emerging Businesses Fund is Rs. 26.93(as at 21st May 2018) and the historical returns on the fund has been in the following pattern:

The fund has made its mark in the market and is one of the most attractive fund among the small cap oriented mutual fund.

2. HDFC Small Cap Fund

Launched in January 2013 this fund is a small cap equity oriented fund with high risk and high return (as with most of the typical small-cap funds). The key details of the fund are:

Launch DateJanuary 2013
Fund CategoryEquity – Small Cap
Asset Under Management (AUM)Rs. 2576.70 crore
Scheme TypeOpen-ended
Scheme BenchmarkNIFTY Small Cap 100 Total Return Index
Investment ObjectiveProvide long-term capital appreciation by predominantly investing in Small Cap companies
Face Value (Rs/Unit)10.00
Fund ManagersRakesh Vyas ( Since: June, 2014)

Chirag Setalvad (Since: June, 2014)

Expense Ratio2.36
Fund HouseHDFC Mutual Fund

The NAV of HDFC Small Cap Fund is Rs. 45.11(as at 21st My, 2018) and the historical returns of the fund has been in the following pattern:

This fund has constantly outperformed its benchmark and managed to keep its risk metrics lower than the benchmark.


Small and mid-cap funds are the type of funds which weigh very high on the risk parameter. The funds can provide great gains but could also lead to great losses in a turn of the market.

An investor must identify his/her goal and objective before investing in any of the stated funds.

Disclaimer: the views expressed here are of the author and do not reflect those of Groww. 

Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.

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