Guide To Investing In Sbi Small Cap Fund

The SBI Small Cap Fund is an open-ended small-cap equity scheme that provides investors with opportunities for long-term capital growth. The fund has been in existence for over a decade and has provided average annual returns of 26.86% since its inception. It has an expense ratio of 0.63% and an exit load of 1% if redeemed within 1 year. The fund's NAV as of October 14, 2024, was 212.7061. The SBI Small Cap Fund has invested the majority of its money in the stocks of companies such as Kalpataru Projects International Ltd, Whirlpool Of India Ltd, and Finolex Industries Ltd. The fund seeks to invest predominantly in a well-diversified basket of equity stocks of small-cap companies, with a mandate to invest at least 65% of its assets in small-cap stocks.

How to invest in SBI Small Cap Fund online

SBI Small Cap Fund is a mutual fund that predominantly invests in a well-diversified basket of equity stocks of small-cap companies. It is suitable for investors who are looking to invest money for at least three to four years and are seeking very high returns. However, investors should also be prepared for the possibility of higher losses in their investments.

• Understand the Risk and Investment Horizon: SBI Small Cap Fund is considered a "Very High Risk" investment according to SEBI's Riskometer. It is important to note that this fund invests in smaller companies, which tend to experience more significant drops during stock market downturns. Therefore, it is recommended to invest in this fund only if you have a long-term investment horizon of at least seven years.
• Determine the Investment Amount: Decide on the amount you want to invest in the SBI Small Cap Fund. The minimum SIP (Systematic Investment Plan) investment amount for this fund is ₹500. You can use online SIP calculators to determine how much you should invest to achieve your financial goals.
• Choose a Platform: You can invest in the SBI Small Cap Fund directly through the SBI Mutual Fund website. Alternatively, you can use online platforms like MF Central or MF Utility. These platforms provide a convenient way to invest in mutual funds from various fund houses.
• Register and Provide Details: If you choose to invest through the SBI Mutual Fund website, you will need to register and create an account. Provide your personal details, including your name, email address, and bank account information. You may also be required to submit documents for Know Your Customer (KYC) compliance.
• Select the SBI Small Cap Fund: Once you have registered and logged into your account, navigate to the SBI Small Cap Fund page. Review the fund details, such as the investment objective, portfolio, and historical performance. Ensure that you understand the risks and returns associated with the fund.
• Make the Investment: Proceed to make your investment by selecting the SIP or lump sum option. Follow the instructions provided by the platform to complete the investment process. You will typically need to specify the amount you wish to invest and select your preferred payment method.
• Monitor and Review: After investing in the SBI Small Cap Fund, it is important to regularly monitor the performance of the fund. Keep track of how the fund is performing relative to its benchmark and its peers. Review your investment periodically to ensure it aligns with your financial goals and risk tolerance.

Remember, mutual funds, including the SBI Small Cap Fund, are subject to market risks. Past performance does not guarantee future results. It is always recommended to consult with a financial advisor before making any investment decisions to ensure they align with your specific circumstances.

SBI Small Cap Fund Direct Plan vs Regular Plan

SBI Small Cap Fund is a mutual fund scheme from SBI Mutual Fund that seeks to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme. The fund predominantly invests in a well-diversified basket of equity stocks of small-cap companies.

When considering the SBI Small Cap Fund, investors have the option to choose between the Direct Plan and the Regular Plan. Here is a detailed comparison between the two plans:

SBI Small Cap Fund Direct Plan:

• The Direct Plan is offered directly by the Asset Management Company (AMC) without the involvement of intermediaries like distributors or agents.
• It has a lower expense ratio compared to the Regular Plan because no commission is paid to a broker or distributor. The expense ratio of the Direct Plan is 0.63% or 0.66%, depending on the source.
• The lower expense ratio in the Direct Plan leads to higher returns for investors over time.
• Investors can purchase the Direct Plan directly from the website of the fund house (SBI Mutual Fund) or through platforms like MF Central and MF Utility.
• The minimum SIP amount for the Direct Plan is ₹500.
• The NAV of the Direct Plan as of October 14, 2024, was ₹212.7061.
• The Direct Plan has no lock-in period.

SBI Small Cap Fund Regular Plan:

• The Regular Plan is purchased through a mutual fund broker or distributor, who charges a commission for their services.
• It has a higher expense ratio compared to the Direct Plan due to the commission paid to the broker or distributor. The expense ratio of the Regular Plan is 1.56%.
• The higher expense ratio in the Regular Plan results in slightly lower returns for investors.
• Investors do not need to pay any additional fees to purchase the Regular Plan, but the returns may be marginally lower compared to the Direct Plan.
• The NAV of the Regular Plan as of October 14, 2024, was ₹187.0996.
• Like the Direct Plan, the Regular Plan also has no lock-in period.

In summary, while the investment options are the same for both plans, the main difference lies in the involvement of intermediaries and the resulting expense ratios. The Direct Plan offers higher returns in the long run due to its lower expense ratio, making it a more attractive option for investors who are comfortable investing independently without the assistance of a broker or distributor.

SBI Small Cap Fund investment options

SBI Small Cap Fund is an open-ended small-cap equity scheme that offers investors opportunities for long-term growth in capital, along with the liquidity of an open-ended scheme. The fund predominantly invests in a well-diversified basket of equity stocks from small-cap companies. The fund was launched on September 9, 2009, and has been in existence for over 11 years.

Investment Options

SBI Small Cap Fund offers both regular and direct plans, with the primary difference being the expense ratio. Direct plans have a lower expense ratio since there is no commission paid to a broker or distributor. Here is a breakdown of the investment options:

• Regular Plan: This plan has a higher expense ratio compared to the direct plan. The current Net Asset Value (NAV) as of October 4, 2024, is ₹185.33 for the growth option. The expense ratio is 1.56%, and the exit load is 1% if redeemed within one year. The minimum investment required is ₹5000, with a minimum additional investment of ₹1000 and a minimum SIP investment of ₹500.
• Direct Plan: The direct plan offers higher returns due to its lower expense ratio. As per the latest data, the NAV as of October 14, 2024, is ₹212.7061. The expense ratio is 0.63%, and the exit load is 1% if redeemed within one year. The minimum SIP investment is ₹500.

It is important to note that the SBI Small Cap Fund is considered a "Very High Risk" investment according to SEBI's Riskometer. Investors should carefully consider their investment horizon, which is suggested to be more than three years for this fund. Additionally, it is recommended to invest in this fund only through the SIP (Systematic Investment Plan) route.

SBI Small Cap Fund investment risks

SBI Small Cap Fund is an open-ended small-cap equity scheme that falls under the very high-risk category. As with all equity funds, it is recommended that investors use the SIP (Systematic Investment Plan) route. Here are some of the risks to consider before investing in the SBI Small Cap Fund:

Investment Risk

• Short-term Capital Gains Tax: If units are redeemed within 1 year of investment, gains are taxed at a rate of 20%.
• Long-term Capital Gains Tax: If units are redeemed after 1 year of investment, gains of up to Rs. 1 lakh in a financial year are exempt from tax. Gains over Rs. 1 lakh will be taxed at a rate of 10%.
• Dividend Distribution Tax: Dividend income from this fund will be taxed according to the investor's tax slab. If an investor's dividend income exceeds Rs. 5,000 in a financial year, a TDS of 10% will be deducted by the fund house.
• Exit Load: There is an exit load of 1% if the investment is redeemed within 1 year.
• Market Risk: SBI Small Cap Fund invests in smaller companies, which tend to be more volatile than larger companies. This means that while the fund may offer higher returns in the long term, there is also a higher risk of losses in the short term.
• Liquidity Risk: There is no lock-in period for SBI Small Cap Fund, but investors should be aware that mutual fund investments are not as liquid as other investments. Withdrawing money before the recommended investment horizon of 3-4 years may result in losses.
• Concentration Risk: The fund has a concentrated portfolio, with the top 10 equity holdings constituting around 28.82% of the assets. This means that the performance of the fund is heavily dependent on a small number of stocks.

SBI Small Cap Fund historical performance

SBI Small Cap Fund has delivered average annual returns of 26.86% since its inception in January 2013. The fund has doubled the money invested in it every three years. As of 4 October 2024, the fund's trailing returns over different time periods are: 38.33% (1yr), 21.87% (3yr), 29.41% (5yr) and 21.36% (since launch). The fund's total return over a given period is higher than the category average of equity small-cap funds.

The fund's performance has been average among its peers. Its 1-year and 5-year annualised returns are lower than the category average, while its 3-year and 10-year annualised returns are higher.

SBI Small Cap Fund's performance in the last 10 years has been the highest among small-cap funds. It has generated 20% more returns for every unit of risk taken. However, the fund ranks lower in terms of generating consistent returns.

Frequently asked questions