With 38% Returns In 1-year, Should You Invest In SBI Small Cap Fund?

The SBI Small Cap Fund caused a sensation last year with an increase in income. In fact, the fund's return was close to 38% last year1 in line with strong market momentum. This makes it one of the best performing mutual funds.

The fund's long-term returns are extremely strong

Even the long-term returns of the SBI Small Cap Fund have been strong. The fund has generated strong returns of 27 percent year-over-year over the past seven years, while the 10-year return has been 20.13 percent year-over-year over the past 10 years.

A large part of the revenue is due to the way the markets have moved in recent years. The SBI Small Cap Fund invests about 95.4 percent of assets currently under management and the cash balance is maintained.

The SBI small cap fund has an investment option through the SIP funnel where you can consider investing small amounts of money each month. The assets managed by the SBI Small Cap Fund are currently Rs 6,628 crores.

A Strong portfolio         

SBI Small Cap Fund has a very strong portfolio that includes teams like Elgi Equipments, JK Cement, Blue Star, Sheela Foam, V-Guard Industries, Hawkins, City Union Bank, Hatsun Agro, etc. The ratings on some of these stocks are already extended and they anticipate that much of a rally in the portfolio would be reckless. However, valuations in the stock markets can sometimes remain illogical for a long period of time.

Most of the portfolio is in equities and the fund is likely to stay in a little more cash, given the way the markets have seen their explosive rally. Currently, the Net Asset Value of the Fund is Rs 75.04 under the Growth Plan, while the Dividend Plan is Rs 44.33.

Should you invest in the SBI small cap fund?

Markets have almost doubled from the lows seen in March 2020. We all know that to make money in the stock markets or mutual funds we must invest at low levels and sell at high levels. Investing when Sensex is few 100 points away from 50,000 levels is dangerous and full of risk.

Therefore, we suggest that investors do not invest a large amount in mutual funds or equities at this stage. Investing through a SIP route is the best possible option. In fact, if you've won money, it wouldn't be a bad idea to take some money off the table. For now, the best investment option would be the Systematic Investment option, where your average exposure can be calculated each month. Investors must be very careful when investing large amounts at this stage.

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