Did you know that the Tata Small Cap Fund has been giving annualized returns of more than 24% since its launch? Being a small cap fund, it is very challenging to manage such a consistent performance.
So, if you are looking for a promising way to create wealth to secure your future, then this scheme is for you. And in this post, you will get to learn why.
This post explains to you one of the most effective investment strategies in the financial market along with the benefits that you can get by investing in small cap funds.
And if you have a doubt whether the scheme is fit for long term investment or not then don’t worry your doubt will also be resolved. So, let us start the exploration with the overview of the scheme.
Tata Small Cap Fund Regular Growth: The Big Picture
This scheme is managed by Tata Mutual Fund, one of the most trusted fund houses in the country. It was launched in 2018. And its objective is to provide its investors with long term capital appreciation.
This scheme holds great potential to grow at a rapid pace. So, if you are an aggressive investor then this scheme can give you great benefits. The following are some interesting features about the scheme:
- The fund house manages a massive AUM of over Rs 9,100 crores which is very high for such a young scheme.
- The minimum amount to start a SIP in the scheme is Rs 100 only, which is a surprisingly low amount.
- The Tata Small Cap Fund Regular Plan Growth gives unbelievable annualized returns of 22.9% for 3 years.
Such a huge size of fund and outstanding annualized returns show that the scheme must be using a good investment approach. So, let’s learn about what’s good about it.
What Is the Strategy of Tata Small Cap Fund?
The investment strategy of the Tata Small Cap Fund Regular Growth is GARP which stands for Growth at A Reasonable Price. To find promising small cap companies, the fund uses a bottom-up approach. It prioritizes companies with strong fundamentals and latent growth potential.
And to identify these companies, the scheme conducts an in-depth analysis of those companies’ cash flows, balance sheets, etc. The scheme mainly invests in the small cap stocks that are available at affordable prices but still hold great potential to outgrow others.
This makes the scheme highly feasible for a large number of investors. Furthermore, to save your portfolio from the negative impacts of market fluctuations, the scheme invests in diverse sectors. This helps it attain its objective which is to provide you with long term capital appreciation.
Small cap funds like the Tata Small Cap Fund can create wealth for you within an ideal duration. But they are highly volatile as well. And this means you may not earn your expected returns from these mutual funds. But then why are these funds still popular among investors? Let's find out.
What Are the Benefits of Small Cap Mutual Funds?
If you have ever invested in small cap funds, then you must be aware of their following benefits. And if you haven’t then you can learn about the benefits now:
Upward Growth Trajectory
Since these mutual funds invest in small cap companies that belong to emerging sectors. These funds have great potential to grow at a rapid pace and earn substantial returns. By starting a SIP or lump sum investment plan in the scheme, you can enjoy the fun of earning great profits.
Distribution of Risks
By investing in different sectors, the scheme distributes the burden of the risk of market volatility. Since small cap funds are more susceptible to market fluctuations, hence it becomes necessary to make sure that these funds earn profits despite the changes in the market.
Invest Early, Earn More
Small cap funds invest in companies that are in their early stages. So by investing in these schemes in this phase, you can start earning good profits from a very early phase. And by investing in these mutual funds, you also get to provide those companies with essential financial resources.
Tap into the Hidden Gems
Small cap stocks are usually not recognized by large institutions because they do not have enough market reputation. But experienced fund managers can identify these stocks for you. Hence, by investing in these hidden gems, you will tapping into their real potential.
Growth With Quick Adaptation
Small cap companies can swiftly adapt to market changes and you can get significant advantages from this. Because their adaptability protects your portfolio against the risk of market volatility. Their focused business strategy can give you higher returns.
These benefits are wonderful and it is clear why investors like small cap funds so much. But since small cap funds are highly volatile in nature, there is a possibility that the Tata Small Cap Fund Regular Growth may not be a good investment option for long term. Is it?
Is Tata Small Cap Fund Good For Long Term Investment?
Small cap funds like the Tata Small Cap Fund are a good long term investment option. Since you will need to navigate through market fluctuations for a few years, if you can tolerate this much risk, then you can get outstanding returns from these funds.
And considering the importance of portfolio diversification, you can reduce the impact of market fluctuations within safe limits by actively diversifying the portfolio. The most important thing here is that you must have clear financial goals that align with such schemes.
Why Should You Invest in Tata Small Cap Fund?
Besides giving you the benefits of being a small cap mutual fund scheme, the following are some specific reasons to convince you to invest in Tata Small Cap Regular Growth:
Consistent Track Record Since Launch
The scheme has been giving annualized returns of 24.91% since its launch. Such a consistent performance is very hard to achieve and even harder to ignore. The fund also has been giving outstanding SIP and rolling returns in both 3-year and 5-year plans.
Fund Managers With Decades of Experience
Expert minds like Mr. Chandraprakash Padiyar and Mr. Jeetendra Khatri have been managing the fund for years. Under their leadership, the AUM of this scheme has grown unexpectedly. Both of these fund managers have more than 20 years of experience in the financial services industry.
Affordable Costs for Fund Management
The expense ratio of this scheme is less than 1% which is a competitive fee in the market. Such a low fund management charge further allows you to get higher returns on your SIP or lump investment plans with the scheme.
Now that you know how the Tata Small Cap Fund Regular Plan Growth can be your easy way to create wealth, let us conclude the discussion with some final thoughts on the scheme.
Final Thoughts
If you have a high risk appetite and want to get the maximum out of your SIP investment then this scheme is the best fit for you. It will help you attain long term goals like purchasing a house for your family or securing the future for your children. And even if you want to have a secure retirement, this scheme can create more than enough wealth for you that you can use once you retire.
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