3 equity mutual funds multiplied lumpsum investments Unbelievable over 10 times in 10 years

Equity mutual funds are one of the most popular investment options for long-term wealth creation. They invest in the stocks of companies across various sectors and market capitalizations and aim to generate higher returns than the benchmark indices over time. However, not all equity mutual funds perform equally well, and some of them may even underperform the market. Therefore, it is important to choose the right fund that suits your risk profile, investment horizon, and financial goals.

In this article, we will look at three equity mutual funds that have multiplied lump sum investments over 10 times in 10 years, as of February 15, 2024. These funds are:

• Nippon India Small Cap Fund
• SBI Small Cap Fund
• Quant ELSS Tax Saver Fund

We will also discuss the key features, performance, and risk factors of these funds and how they can fit into your portfolio.

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Equity Mutual Funds: Nippon India Small Cap Fund

The fund was launched in September 2010 and has an asset size of Rs. 14,287 crore as of January 31, 2024. The fund is managed by Mr. Samir Rachh, who has over 20 years of experience in the equity markets. The fund follows a bottom-up approach to stock selection and focuses on identifying companies that have strong business models, competitive advantages, and sustainable growth prospects.

The fund has delivered a stellar performance over the past 10 years and has multiplied a lump-sum investment of Rs. 1 lakh made on February 15, 2014, to Rs. 10.64 lakh as of February 15, 2024. This translates to a compounded annual growth rate (CAGR) of 26.55%, which is much higher than the category average of 18.11% and the benchmark Nifty Smallcap 100 TRI of 15.67%. The fund has also outperformed its peers and the benchmark across various time periods, such as 3 years, 5 years, and 7 years.

The fund has a diversified portfolio of 75 stocks as of January 31, 2024, with the top 10 holdings accounting for 28.65% of the assets. The fund has a higher exposure to cyclical sectors, such as industrials, consumer discretionary, and materials, which account for 58.51% of the portfolio. The fund also has moderate exposure to defensive sectors, such as healthcare, consumer staples, and utilities, which account for 19.71% of the portfolio. The fund has a low turnover ratio of 22%, which indicates that the fund manager does not churn the portfolio frequently.

The fund has a moderately high risk profile, as indicated by its standard deviation of 24.63% and beta of 1.07, which are higher than the category average of 23.38% and 0.99, respectively. The fund also has a lower Sharpe ratio of 0.86, which indicates that the fund has generated lower risk-adjusted returns than the category average of 0.89. The fund has a higher expense ratio of 2.08%, which is higher than the category average of 1.91%.

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The fund is suitable for investors who have a high risk appetite, a long-term investment horizon of at least 10 years, and are looking for high growth potential and returns from the small-cap segment of the market. The fund can also help in diversifying the portfolio and reducing the correlation with the broader market. However, investors should also be prepared for high volatility and downside risk in the short to medium term and monitor the fund’s performance and portfolio quality regularly.

SBI Small Cap Fund

The SBI Small Cap Fund is another open-ended equity scheme that invests predominantly in small-cap stocks. The fund was launched in September 2009 and has an asset size of Rs. 9,091 crore as of January 31, 2024. The fund is managed by Mr. R. Srinivasan, who has over 25 years of experience in the equity markets. The fund follows a blend of growth and value investing styles and looks for companies that have strong fundamentals, attractive valuations, and high growth potential.

The fund has also delivered a remarkable performance over the past 10 years and has multiplied a lump-sum investment of Rs. 1 lakh made on February 15, 2014, to Rs. 10.48 lakh as of February 15, 2024. This translates to a CAGR of 26.32%, which is also higher than the category average of 18.11% and the benchmark S&P BSE Small Cap TRI of 16.01%. The fund has also outperformed its peers and the benchmark across various time periods, such as 3 years, 5 years, and 7 years.

The fund has a concentrated portfolio of 49 stocks as of January 31, 2024, with the top 10 holdings accounting for 41.02% of the assets. The fund has a higher exposure to cyclical sectors, such as industrials, consumer discretionary, and materials, which account for 63.88% of the portfolio. The fund also has moderate exposure to defensive sectors, such as healthcare, consumer staples, and communication services, which account for 17.41% of the portfolio. The fund has a high turnover ratio of 58%, which indicates that the fund manager changes the portfolio frequently.

The fund has a moderately high risk profile, as indicated by its standard deviation of 24.38% and beta of 1.05, which are higher than the category average of 23.38% and 0.99, respectively. The fund also has a lower Sharpe ratio of 0.85, which indicates that the fund has generated lower risk-adjusted returns than the category average of 0.89. The fund has a lower expense ratio of 1.83%, which is lower than the category average of 1.91%.

The fund is suitable for investors who have a high risk appetite, a long-term investment horizon of at least 10 years, and are looking for high growth potential and returns from the small-cap segment of the market. The fund can also help in diversifying the portfolio and reducing the correlation with the broader market. However, investors should also be prepared for high volatility and downside risk in the short to medium term and monitor the fund’s performance and portfolio quality regularly.

Quant ELSS Tax Saver Fund

Quant ELSS Tax Saver Fund is an open-ended equity-linked saving scheme (ELSS) that invests predominantly in equity and equity-related instruments. ELSS funds are a type of mutual fund that offer tax benefits under Section 80C of the Income Tax Act, 1961. They have a lock-in period of three years, which means that investors cannot redeem their units before the completion of three years from the date of investment. ELSS funds are also considered to be one of the best ways to save taxes and create wealth in the long run.

The fund was launched in December 2007 and has an asset size of Rs. 77 crore as of January 31, 2024. The fund is managed by Mr. Sandeep Tandon, who has over 20 years of experience in the equity markets. The fund follows a multi-cap approach to investing and invests across various sectors and market capitalizations based on the fund manager’s conviction and market conditions.

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The fund has delivered an impressive performance over the past 10 years and has multiplied a lump-sum investment of Rs. 1 lakh made on February 15, 2014, to Rs. 10.07 lakh as of February 15, 2024. This translates to a CAGR of 25.77%, which is also higher than the category average of 15.87% and the benchmark Nifty 500 TRI of 14.66%. The fund has also outperformed its peers and the benchmark across various time periods, such as 3 years, 5 years, and 7 years.

The fund has a diversified portfolio of 68 stocks as of January 31, 2024, with the top 10 holdings accounting for 35.67% of the assets. The fund has a balanced exposure to cyclical and defensive sectors, with the top five sectors being financials, healthcare, consumer discretionary, industrials, and materials, which account for 66.13% of the portfolio. The fund has a low turnover ratio of 16%, which indicates that the fund manager does not churn the portfolio frequently.

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The fund has a moderately high risk profile, as indicated by its standard deviation of 22.73% and beta of 0.98, which are higher than the category average of 21.33% and 0.93, respectively. The fund also has a lower Sharpe ratio of 0.84, which indicates that the fund has generated lower risk-adjusted returns than the category average of 0.86. The fund has a higher expense ratio of 2.56%, which is higher than the category average of 2.08%.

How do I invest in these funds?

If you are interested in investing in any of these funds, you will need to follow some simple steps:

• First, you will need to complete your Know Your Customer (KYC) process if you have not already done it. KYC is a mandatory requirement for investing in mutual funds, and it involves verifying your identity, address, and other details. You can do your KYC online through various platforms, such as CAMS, Karvy, or the fund house’s website.
• Second, you will need to choose a mode of investment, either a lump sum or a systematic investment plan (SIP). Lumpsum investment means that you invest a fixed amount of money at once, while SIP means that you invest a fixed amount of money at regular intervals, such as monthly or quarterly. SIPs are generally preferred by most investors, as they help in averaging out the cost of a purchase and also instill the discipline of saving and investing regularly.
• Third, you will need to select the fund that you want to invest in and fill out the online application form. You will also need to provide your bank details, PAN number, and nominee details. You can also choose the dividend or growth option of the fund, depending on your preference. The dividend option means that you will receive periodic payouts from the fund, while the growth option means that you will reinvest the profits in the fund and benefit from compounding.
• Fourth, you will need to make the payment for your investment, either through net banking, debit card, or UPI. You will receive a confirmation message and an email once your transaction is successful. You will also receive an account statement and a unit allotment letter from the fund house within a few days.

Investing in these funds can offer you several benefits, such as:

• High returns: These funds have delivered exceptional returns over the past 10 years and have multiplied the investments over 10 times. These funds have also outperformed their respective benchmarks and categories by a wide margin. These funds can help you achieve your long-term financial goals, such as retirement, children’s education, or buying a house, faster and easier.
• Tax benefits: The Quant ELSS Tax Saver Fund is an ELSS fund, which means that you can claim a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961, by investing in this fund.

  This can lead to savings of up to Rs. 46,800 in taxes, depending on your tax slab. Moreover, the returns from this fund are also tax-free, as long as you hold the units for more than one year.

• Diversification: These funds invest in a diversified portfolio of stocks across various sectors and market capitalizations, which can help reduce the overall risk and volatility of your portfolio. These funds can also help reduce the correlation with the broader market and provide a cushion during market downturns.
• Professional management: These funds are managed by experienced and qualified fund managers who have a deep understanding of the equity markets and the companies they invest in. They conduct rigorous research and analysis and follow a disciplined and consistent investment process. They also monitor the performance and portfolio quality of the funds regularly and make timely changes as per market conditions and opportunities.

What are the risks of investing in these funds?

Investing in these funds also involves some risks, such as:

• Market risk: These funds are subject to the fluctuations and uncertainties of the equity markets, which can affect their performance and returns. The equity markets can be influenced by various factors, such as economic conditions, political events, corporate earnings, global trends, etc. These factors can cause the prices of the stocks to rise or fall and impact the NAV of the funds. Therefore, these funds can experience high volatility and downside risk in the short to medium term and may even incur losses.
• Concentration risk: These funds invest predominantly in small-cap stocks, which are more concentrated and less diversified than large-cap or mid-cap stocks. Small-cap stocks are also more illiquid and less researched than large-cap or mid-cap stocks, which means that they have lower trading volumes and less information available. These factors can make small-cap stocks more prone to manipulation, speculation, and fraud and also increase the impact cost and exit load of the funds. Therefore, these funds can face higher concentration and liquidity risks and may suffer from a higher erosion of value.
• Scheme risk: These funds are also subject to the risk of the scheme itself, which can affect their performance and returns. The scheme risk can arise due to various reasons, such as change in the fund manager, change in the investment strategy, change in the expense ratio, change in the exit load, etc. These changes can alter the risk-return profile and the suitability of the funds for the investors, and they may also result in lower returns or higher costs for the investors.

Conclusion

In conclusion, these are three equity mutual funds that have multiplied lump sum investments over 10 times in 10 years, as of February 15, 2024. These funds are the Nippon India Small Cap Fund, the SBI Small Cap Fund, and the Quant ELSS Tax Saver Fund. These funds have delivered outstanding performance and returns over the past 10 years and have also outperformed their respective benchmarks and categories by a wide margin. These funds can offer several benefits to investors, such as high returns, tax benefits, diversification, and professional management.

However, these funds also involve some risks, such as market risk, and scheme risk, which can affect their performance and returns. Therefore, these funds are suitable for investors who have a high risk appetite, a long-term investment horizon of at least 10 years, and are looking for high growth potential and returns from the small-cap segment of the market. These funds can also help in diversifying the portfolio and reducing the correlation with the broader market. However, investors should also be prepared for high volatility and downside risk in the short to medium term and monitor the fund’s performance and portfolio quality regularly.

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