SBI Small & Midcap Fund Direct is one of the most famous small-cap funds in the market right now. The main reason being its stellar performance over the years.

It is a fund with high risk and has given a return of 34.08% since its launch on January 1, 2013. Since then its performance over the years are as follows:

Duration Returns
1 year  36.58%
3 years  26.23%
5 years  37.48%

From the above, we can easily understand why this fund is so much in demand, especially with investors who aspire for high returns over long investment tenure.

Latest News About SBI Small and Midcap Fund

If you are a regular investor in such mutual fund schemes, restrictions on investments can easily throw your financial goals off track. Especially in the schemes where lump sum and SIPs have been completely suspended.

But now a good news from SBI AMC for those investors.

SBI Small and Mid-cap will reopen for fresh subscriptions through the systematic investment plan (SIP) mode from May 16, 2018.

But under the fund name SBI Small Cap Fund and will have an investment cap of ₹25,000 per month and per PAN card. 

It is the first mutual fund in the small-cap category, to reopen for fresh subscriptions after many small-cap funds had put restrictions on inflows because of rising inflows, higher valuations, and lower investment opportunities.

You would be well aware of the fact that small-cap funds are extremely risky. While these funds have the potential of generating supernormal returns, they can lead to deep losses when the market takes a turn.

So, SIP is the best mode of investing in any small-cap equity oriented mutual funds.

SIP is one of the best ways to invest and tested method of minimizing risk and yet enjoying good returns, by regular, periodic investment, over a long horizon.

Most financial advisers and a large number of investors prefer investing in equity mutual funds through SIPs. The obvious benefit of SIP is that it helps investors to average the rupee cost of a unit and thereby helps the investor to earn higher returns in the long-term.

Read More: All About SIP – Systematic Investment Plan

But in case you still want to invest a lump sum in the small-cap mutual fund category, it is best to pick alternative schemes that match your risk profile and investment horizon.

Alternative Small-Cap Funds for Lump Sum Investment

1. HDFC Small Cap Fund – Direct

This is a Small cap Mutual Fund launched on 1 January 2013. It is a fund with high risk and has given a return of 23.14% since its launch.

Returns per annum over the years from this fund are:

Duration Returns
1 year  27.66%
3 years  23.85%
5 years  25.16%

Key information about this fund:

Rating by Groww 5 star
AUM (Fund Size) ₹2,152 Cr
Minimum SIP ₹500
Minimum SWP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark NIFTY Smallcap 100 TRI since its launch.
Age of the fund 5 years old
Expense Ratio 0.92%
Exit Load If redeemed bet. 0 Year to 1 Year; Exit Load is 1%;
Type  Open ended

The investment objective of the scheme is to generate long-term capital growth from an actively managed portfolio of equity and equity-related securities, including equity derivatives.

This mutual fund invests in stocks of small size companies. These companies give high returns but are highly risky stocks.

2. L&T Emerging Businesses Fund – Direct

This is a Small cap Mutual Fund launched on 12 May 2014. It is a fund with high risk and has given a return of 29.06% since its launch.

Returns per annum over the years from this fund are:

Duration Returns
1 year  20.22%
3 years  26.50%
5 years  NA

Key information about this fund:

Rating by Groww 5 star
AUM (Fund Size) ₹4,286 Cr
Minimum SIP ₹500
Minimum SWP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark S&P BSE Small Cap TRI since its launch.
Age of the fund 4 years old
Expense Ratio 1.76%
Exit Load If redeemed bet. 0 Year to 1 Year; Exit Load is 1%;
Type  Open ended

This scheme seeks to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities, including equity derivatives, in the Indian markets with key theme focus being emerging companies (small cap stocks).

The scheme could also additionally invest in foreign securities. Emerging companies are businesses which are typically in the early stage of development and have the potential to grow their revenues and profits at a higher rate as compared to the broader market.

However, there is no assurance that the objective of the scheme will be realized and neither does the scheme assure or guarantee any returns.

3. Sundaram SMILE Fund – Direct

This is a Small cap Mutual Fund launched on 2 January 2013. It is a fund with high risk and has given a return of 29.06% since its launch.

Returns per annum over the years from this fund are:

Duration Returns
1 year  7.37%
3 years  15.99%
5 years  28.19%

Key information about this fund:

Rating by Groww 4 star
AUM (Fund Size) ₹1,481 Cr
Minimum SIP Not Supported
Minimum SWP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark S&P BSE Small Cap TRI since its launch.
Age of the fund 5 years old
Expense Ratio 1.78%
Exit Load If redeemed bet. 0 Months to 12 Months; Exit Load is 1%;
Type  Open ended
The investment objective of the scheme is to primarily achieve capital appreciation by investing in diversified stocks that are generally termed as small and mid caps and by investing in other equities.
However there is no assurance that the investment objective of the scheme will be achieved. The scheme does not guarantee/indicate any returns.
These funds are even better ratings than SBI small and mid-cap funds and have stellar performance track records over the years.

SBI Small and Midcap Direct Fund: Key Information

Before start investing in any mutual fund scheme, you should look into some basic key features.

Launch Date 01 January 2013
Fund Category Equity – Small Cap
Plan Type Direct
Rating by Groww 4 Star
AUM (Fund Size) ₹943
Riskometer High
Minimum SIP NA
Minimum SWP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark S&P BSE Small Cap TRI since its launch.
Age of the fund 5 years old
Expense Ratio 1.25%
Exit Load If redeemed between 0 Year to 1 Year; Exit Load is 1%;
Type  Open-ended

The objective of this scheme is to generate income and long-term capital appreciation by investing in a diversified portfolio of predominantly equity and equity-related securities of companies identified as industry leaders.

This SBI mutual fund may also invest a certain portion of its corpus in debt and money market securities.

The fund’s stock picks in the small-cap space in the past couple of years have been behind the strong performance.

However, there can be no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns.

This fund has beaten its benchmark consistently since its launch. A substantial boost to the performance in the last one year has earned great respect from investors interested in the small-cap category.

Apart from its performance, SBI Small and Mid Cap Fund is managed by a good fund manager.

Its AUM isn’t too big as compared to other top small-cap funds and its expense ratio is also good.

But in 2015, SBI AMC announced that from 30 October, it was not to take any fresh subscriptions in its Small and Midcap mutual fund scheme, either as a lump sum or through SIPs.

The reason given by the fund house is that the offer document of the scheme states that it will have a capacity constraint of ₹750 crore. It was nearing the target amount in October 2015, that is why it has stopped accepting fresh investments.

Read More: Why SBI Small and Mid Cap Fund Is Not Taking Fresh Investments and Other 3 Top Options to Invest In

Also, the fund house felt that with a large corpus it would be a struggle to find good investment avenues within the narrow universe of small and mid-cap stocks in Indian markets.

Read More:10 Tips on Investing in Mutual Funds

To look at some of the best performing funds from every category of mutual funds, check out Groww 30 best mutual funds to invest in 2018.

Happy Investing!

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