Small-cap mutual funds appeal to investors seeking significant portfolio growth possibilities. These funds, which focus on smaller firms set for growth, provide substantial returns. Assets Under Management (AUM) are an essential factor in determining the attractiveness and trustworthiness of these products. Indicating confidence in the management and approach of the fund, AUM is a measure of investor trust and fund popularity.
In this article, we look at the top 10 small-cap mutual funds by AUM, shining light on their track record, features, and the insights they provide to investors navigating the volatile terrain of small-cap investing.
What are Small Cap Mutual Funds?
Small-cap mutual funds primarily invest in small-cap firms with market capitalizations below a certain threshold. These companies are often in early development stages with high growth potential and higher risks. To mitigate these risks and provide potentially high returns, small-cap mutual funds pool investors’ money to create diversified portfolios of small-cap stocks. Experienced fund managers conduct extensive research to select suitable investments aligned with the fund’s goals and risk tolerance. This enables investors to access the growth potential of small-cap companies within a managed environment.
Significance of AUM in Fund Evaluation
Assets Under Management is vital in analysing the top 10 small-cap mutual funds, offering critical records about their reputation, equilibrium, and investor trust. AUM is the whole marketplace cost of all the fund’s belongings, including investments in bonds, stocks, and other securities. Here’s why AUM is sizable in fund assessment:
Popularity Indicator
A higher AUM frequently denotes increased investor interest in and assurance over the performance and investment plan of the fund. Professionals in the industry and investors alike will likely pay attention to funds with high AUM.
Liquidity and Stability
Higher AUM amounts usually correspond to higher liquidity since funds can better fulfil redemption requests without appreciably affecting portfolio holdings. This liquidity improves the fund’s stability and lowers the possibility of forced selling during the market.
Scale and Efficiency
Higher AUM funds could take advantage of economies of scale, which let them distribute fixed expenses across a broader range of assets. It can result in fewer investor expenses, increasing the fund’s overall efficacy and cost-effectiveness.
Managerial Experience
AUM may be a proxy for a fund manager’s knowledge and skill. Investors frequently see funds with a more significant AUM managed by experts capable of handling complicated market situations and generating consistent returns over the years.
Diversification Opportunities
Larger AUM may allow funds to diversify their holdings over various securities and asset classes, lowering concentration risk and improving portfolio resilience.
Benchmark for Comparison
AUM offers a benchmark for comparing funds in the same asset or investment category. Investors may use AUM as one of numerous metrics to evaluate funds and make educated investment decisions.
Methodology for Selection
Choosing the top small-cap mutual funds determined by AUM is a methodical technique to pinpoint funds exhibiting high investor confidence and popularity. Here is a complete outline of the methodology.
Define Criteria
Set explicit criteria for picking small-cap mutual funds, with AUM as the significant indicator. Consider cost ratios, past performance, fund management expertise, and investing approach to ensure a thorough review.
Data Collection
Compile pertinent information from reliable sources, including fund prospectuses, industry publications, and financial websites. Ensure the data’s quality and dependability to allow for an objective examination.
Screening Process
Small-cap mutual funds are screened using preset criteria, which exclude funds that do not satisfy the minimal levels for AUM and other essential indicators. Reduce the number of funds in the original list to just those that show promise and attract interest from investors.
Comparison and Ranking
Sort the remaining funds according to their AUM; a higher AUM signifies more popularity and investor trust. Identify anomalies and trends by comparing AUM data to other funds in the same category.
Performance Analysis
Evaluate each fund’s past performance, considering criteria such as annualised returns, fluctuation, and consistency. Examine how AUM corresponds with performance measures to determine the fund’s capacity to provide value to investors.
Qualitative Assessment
It evaluates qualitative characteristics such as fund manager skills, investing philosophy, and risk management techniques. Please consider how these elements work in concert with the fund’s performance and AUM to offer a comprehensive picture of its quality.
Final Selection
Based on the detailed research, choose the top small-cap mutual funds with high AUM, regular returns, and solid investing fundamentals. To guarantee a well-rounded decision, consider risk management and diversification strategies.
Validation and Review
To guarantee objectivity and dependability, do a peer review or engage with financial professionals during selection.
Conduct frequent evaluations to analyse fund performance and make any required changes to the selection criteria.
The selection procedure enables the recognition of top small-cap mutual funds that match investor objectives and have the potential for long-term development and value by employing an accurate approach that combines quantitative research and qualitative assessment.
Unveiling the Top 10 Small Cap Mutual Funds Based on AUM
Want to start investing in the top small-cap mutual funds by AUM? Check out the list below:
| Fund | AUM | 3Y Returns | Exp. Ratio (%) |
| Quant Small Cap Fund Growth Option Direct Plan | ₹15664 Crores | 44.91% | 0.7% |
| Nippon India Small Cap Fund – Direct Plan – Growth Plan | ₹45894 Crores | 36.45% | 0.73% |
| HSBC Small Cap Fund Direct-Growth | ₹13981 Crores | 35.66% | 0.68% |
| TATA Small Cap Fund Direct-Growth | ₹6125 Crores | 33.78% | 0.31% |
| Bandhan Small Cap Fund Direct-Growth | ₹4290 Crores | 32.07% | 0.28% |
| Canara Robeco Small Cap Fund Direct-Growth | ₹9586 Crores | 31.14% | 0.48% |
| Bank of India Small Cap Fund Direct-Growth | ₹911 Crores | 30.89% | 0.77% |
| Invesco India Small Cap Fund Direct-Growth | ₹3659 Crores | 30.56% | 0.36% |
| Edelweiss Small Cap Fund Direct-Growth | ₹3157 Crores | 30.31% | 0.4% |
| Axis Small Cap Fund Direct-Growth | ₹19531 Crores | 29.5% | 0.53% |
Conclusion
Finding the top small-cap mutual funds based on AUM provides valuable insights regarding investor confidence and fund popularity. However, successful investing necessitates a balanced approach considering quantitative measures like AUM and performance and qualitative aspects like fund management skills and investment strategy.
Thorough study and a well-rounded appraisal are required to manage the volatile small-cap market and accomplish long-term investing objectives.
FAQs
You should examine your small-cap fund investments at least once a year, or more regularly if there are substantial market changes, to ensure they align with your investing objectives and risk tolerance.
AUM (Assets Under Management) represents the overall marketplace fee of a fund’s investments, demonstrating investor consideration, fund balance, and the ability to address extensive inflows and withdrawals well.
Given the developing ability of small-cap corporations, investment in small-cap finances can yield extra massive returns. However, those investments are associated with extended volatility and chance.
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.