Are you the kind of person who does not want to take a chance by investing in the wrong mutual fund scheme? Then, the Nippon India Small Cap Fund is for you. Since it invests in small cap companies, it holds great potential to grow in the future. The scheme gives you benefits like risk minimization, wealth creation, and consistent returns despite market fluctuations.
But how can investing in small cap companies give you all these benefits? Read this entire post and you will know.
Not only this, you will also get to know whether it is safe to invest in the scheme or not and whether you should do a SIP or lump sum investment. This post answers such important questions in the simplest way. So let’s start the discussion by understanding small cap funds.
What Do You Mean By Small Cap Funds?
Small cap mutual funds basically invest in the assets of those companies that have relatively smaller market capitalization. As per SEBI regulations, companies that have a market capitalization equal to Rs 5,000 crores or less are considered small-cap companies. These companies are typically ranked below 250 in the market.
Small cap funds are required to invest 65% or more of their assets in the securities of those companies. Small cap companies hold great potential for rapid growth. Small cap funds target equity and other such securities in these companies. This way, they make sure that they can gain maximum returns. Let’s learn more about the scheme.
Overview of Nippon India Small Cap Fund
Launched in 2010, the fund is managed by Nippon Life India Asset Management Limited (NAM India). Mr. Sundeep Sikka is the current CEO, and Mr. Dhrumil Shah serves as the lead fund manager for the scheme. It primarily invests in equity stocks and its benchmark index is NIFTY Small Cap 250 TRI. The Nippon India Small Cap NAV, as per recent data, is Rs 161.72.
Like any other small cap fund, this scheme also focuses on small cap companies with high growth potential. But it differs from other funds in terms of investment objective. Here is what is unique about it:
Investment Objective
The scheme mainly focuses on creating wealth for its investors. For this, it mainly invests in the equity and its related stocks. These stocks hold the greatest potential to give huge returns. And to give continuous returns, it also invests in instruments like debt and money market securities.
Such an inclusive investment that makes sure that investors get returns on a constant basis is what makes this mutual fund scheme different from others. But one question arises: what are the benefits of investing in the Nippon India Small Cap Fund? Let’s find out.
What are the Benefits of Investing in the Nippon India Small Cap Fund?
The following are the benefits that you will get by investing in the Nippon India Small Cap Fund:
Flexibility of Investment
You can start a SIP of Rs 100 only. Such a minimum amount allows salaried individuals or even students to invest in the scheme.
Future Growth Potential
Since the scheme invests mostly in equity stocks, it has the potential to give you substantial returns in the future.
Continuous Returns
The scheme has been continuously giving returns since it was launched. Such strong performance is not seen in its peers.
Portfolio Diversification
The scheme invests in various sectors. This helps in minimizing the risks of market fluctuations and giving returns during market lows.
Wealth Creation
You can create wealth by investing in the scheme for the long term, eg, 5 years, 7 years, or more. This way, you can secure your future.
These benefits must have convinced you about the Nippon India Small Cap Fund Regular Growth. But investors are often bothered by some questions. So let’s take them one by one, starting with the safety of investing in the fund.
Is It Safe To Invest In Nippon India Small Cap Fund?
Since the fund invests in small-cap companies, the risk profile is very high. These companies are greatly affected by market fluctuations. But considering the fund’s past performance, it is evident that the scheme has given returns in volatile times as well.
And you can also minimize the risk by investing in the scheme for at least 5-7 years. Thus, you should have a high risk tolerance and long term financial goals if you want to get optimum benefits out of the fund.
Besides thinking about the risks, investors are often confused about whether they should invest in the Nippon India Small Cap Fund or not. If you are also confused, then the next part is for you.
Who Should Invest in Nippon India Small Cap Fund?
If you are thinking of investing in the fund for the long term, e.g., for 5 years, 7 years, or more. Then the scheme is best suitable for you. It will help you create wealth in the long term. And don’t worry about market risks, because the portfolio diversification will minimize them for you.
The scheme is less suitable for investors who are more focused on short-term investment plans. Their financial goals may be different, but since market volatility greatly affects small cap companies. Your returns on short-term investments will also be relatively lower. Hence you are recommended to maintain your investment for at least 5 years.
Your financial goals may be different, but some facts about the Nippon India Small Cap Fund Growth will convince you to invest in the scheme.
- NAM India charges relatively lower fees to manage your portfolio. You will have greater returns after paying the charges.
- The large fund size (Rs 50,826 crores) further makes sure that the scheme delivers consistent returns.
Now that you know whether or not you should invest in the scheme, it will be a good time to break the ice regarding the SIP or lump sum investment plan.
What is Good for Nippon India Small Cap Fund: SIP or lump sum investment plan?
To choose between a SIP and a lump sum investment plan, you must consider certain factors. Such as your financial goals and objectives, duration of investment, market conditions, and risk appetite. Small cap mutual funds are relatively volatile, hence a systematic investment plan is more suitable. This way, you can avert the risk of market volatility. And you can also maintain a disciplined way of investment. SIP also relieves you from timing the market each time you invest.
But if you have excess money and have expertise in timing the market. Then you can go with the lump sum investment plan. You don’t need to worry if you are not that good at timing the market. Because the expert fund managers managing the scheme will do it for you. In both ways, the scheme is suitable for you. As the fund has been performing well in all categories.
By now, most of your questions regarding the Nippon India Small Cap fund must be resolved. So, the next section will present some key takeaways from the discussion that you can remember.
Key Takeaways
The following are the key points that you should keep in your mind:
- Small cap fund invests in companies that have a market capitalization lower than Rs 5,000 crores.
- The Nippon India Small Cap Fund was launched in 2010 and its investment objective is capital appreciation in the long term.
- The scheme provides benefits like potential growth in the future, continuous returns, risk minimization, and wealth creation.
- The risk profile of the scheme is relatively higher but having long term financial goals can reduce the risk.
- Investors with long term financial goals of 5-7 years or more will be able to get the optimum benefits of the scheme.
- SIP or lump sum investment plan, it is your choice. The Nippon India Small Cap Fund has been giving returns in all categories.
Now that you know what kinds of benefits you can get from the scheme, it is time to conclude the discussion.
Conclusion
Investors must assess a mutual fund scheme completely before investing in it. This will help them identify the most suitable scheme for them. The Nippon India Small Cap Fund not only gives great returns in both the short term and long term. It is also giving these returns with great consistency. You can also earn huge returns by starting a SIP in the scheme as per your financial goals.
You must be logged in to post a comment.