Small-cap funds are supposed to be riskier than large-cap.
But SBI Small Cap is an outlier.
It’s the best-performing small cap fund over the past 10 years. Yet, it has offered better downside protection than NIFTY 50.
A 🧵on its performance & the secret behind its success.
But SBI Small Cap is an outlier.
It’s the best-performing small cap fund over the past 10 years. Yet, it has offered better downside protection than NIFTY 50.
A 🧵on its performance & the secret behind its success.
Let’s start with performance.
In the last 10 years, SBI Small Cap has delivered an annualised return of 25%.
It means the fund has nearly doubled investors' money every 3 years.
No wonder it’s the best-performing fund across all diversified equity funds.
In the last 10 years, SBI Small Cap has delivered an annualised return of 25%.
It means the fund has nearly doubled investors' money every 3 years.
No wonder it’s the best-performing fund across all diversified equity funds.
The outperformance of the fund is phenomenal
It has delivered almost double the amount compared to its benchmark.
Even compared to its peers, the fund has done exceptionally well.
Check image to see the year-on-year performance of the fund. 👇
It has delivered almost double the amount compared to its benchmark.
Even compared to its peers, the fund has done exceptionally well.
Check image to see the year-on-year performance of the fund. 👇
Stellar returns is not the only highlight of SBI Small Cap.
This small-cap fund has done a fabulous job in terms of downside protection as well.
And not just small-cap, the fund has fallen less than large-cap indices like NIFTY 50.
This small-cap fund has done a fabulous job in terms of downside protection as well.
And not just small-cap, the fund has fallen less than large-cap indices like NIFTY 50.
Since the fund’s inception in 2009, NIFTY 50 TRI has delivered negative returns in 16 quarters.
During these quarters, the SBI Small Cap fund has done exceptionally well. It has fallen less in as many as 10 quarters.
Check the image for data. 👇
During these quarters, the SBI Small Cap fund has done exceptionally well. It has fallen less in as many as 10 quarters.
Check the image for data. 👇
What’s the secret behind SBI Small Cap fund’s success?
Probably the ability of the fund manager, R Srinivasan.
He finds the diamonds in the dust and holds them for a long term.
Its annual turnover ratio is among the lowest in the small cap fund category
Check image 👇
Probably the ability of the fund manager, R Srinivasan.
He finds the diamonds in the dust and holds them for a long term.
Its annual turnover ratio is among the lowest in the small cap fund category
Check image 👇
SBI Small Cap fund follows a bottom up stock picking approach.
It means that the fund may have a different sectoral allocation compared to peers.
And it’s quite visible in its portfolio.
See table 👇
It means that the fund may have a different sectoral allocation compared to peers.
And it’s quite visible in its portfolio.
See table 👇
With such impressive numbers, SBI Small Cap is hard to ignore.
However, don’t go overboard on any small-cap funds.
According to conventional wisdom, small cap allocation should be not more than 20-25% of the equity portfolio, spread across different funds.
However, don’t go overboard on any small-cap funds.
According to conventional wisdom, small cap allocation should be not more than 20-25% of the equity portfolio, spread across different funds.
Data also shows that investors are exposed to high risks in small caps while they don’t get commensurate returns.
You can check the earlier thread ET Money had posted.
You can check the earlier thread ET Money had posted.
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