The small cap mutual fund gives a CAGR of 54% in 3 years. Should you invest?

Mutual fund calculator: Investing in a small cap stock mutual fund is risky, but it offers the highest return in the event of bulls. Quant Small Cap Fund – a small cap equity mutual fund – is a glaring example. This equity fund has generated approximately 35% pa and its benchmark, the S&P BSE 250 SmallCap TRI, has generated a CAGR of approximately 28.5% pa over the past 3 years. The Quant Small Cap fund has not only beaten all its peer funds, but also the category average and benchmark over a 3-year period by generating almost 54% per year over this time horizon.

Speaking on Quant Small Cap Fund, Nidhi Manchanda, Head of Education – Research and Development at Fintoo, said: “Quant Small Cap Fund has also managed risk quite well while delivering higher returns. higher risk-adjusted, which is seen with higher Sharpe ratio.It also managed to control the downside risk.The beta of this fund is 0.94, which indicates a little less volatility than the index reference.”

Should you invest?

On the question of whether one should invest in this small cap stock mutual fund now, Fintoo’s certified financial planner said: “In this fund, the current exposure to small cap stocks is d 54%, mid-cap – 25% and large-cap – 20%.As it is suitably diversified across all three market caps, aggressive to moderate investors can invest in this fund. this fund for a long-term investment period of at least 5 years.” However, the expert said it would be suggested to start a SIP in this fund instead of paying a lump sum all at once.

Echoing the views of Nidhi Manchanda, Vinit Khandare, CEO and Founder of MyFundBazaar, said, “With a CAGR of 54% for a 3-year term, an SIP is a preferred investment option for mutual funds: allowing investors to benefit from the rupee cost averaging process, regular deposits as per the investor’s affordability and easy on the pocket, leading to a better and more affordable investment option, a diversified investment portfolio leading to better and higher returns over the long term and an ideal holistic investment option for new investors and market experts alike.”

‘While an investment in mutual funds via the SIP or Lump Sum method is the appeal of the investor and their appetite for risk, a thorough examination of the mutual fund, analyzing its overall return performance , its advantageous method of payment, etc. is imperative before investing their hard-earned money towards a sustainable financial future,” concluded the MyFundBazaar expert.

Impact on investment

If an investor had invested 1 lakh in advance and 10,000 monthly SIPs three years ago, the absolute value of his investment over the past 3 years had been 11,27,561, according to data from Value Research. If the same thing had been done 5 years ago, the absolute value of his investment would have been 17,27,159.

Disclaimer: The opinions and recommendations made above are those of individual analysts or personal finance companies, and not of Mint.

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Dolores W. Simon