ARN - 75896
Date of Initial Registration: 06 August 2009
Validity of Registration: 05 August 2029
ARN - 75896
Date of Initial Registration: 10 January 2026
Validity of Registration: 18 August 2028
A Small Cap Fund is an equity mutual fund that invests predominantly in shares of small-cap companies. Under the applicable mutual fund categorisation framework, a Small Cap Fund is required to invest at least 65% of its total assets in equity and equity-related instruments of small-cap companies.
For mutual fund categorisation purposes, small-cap companies are generally companies ranked 251st onwards in terms of full market capitalisation.
Small-cap companies are generally businesses that are smaller than established large and mid-sized companies. Some of these businesses may have the potential to grow substantially as their operations, revenues and market presence expand.
Investment in such companies can therefore provide an opportunity for long-term capital appreciation. However, higher growth potential may also be accompanied by higher uncertainty and risk.
Small-cap stocks can experience significantly higher price fluctuations compared with shares of larger and more established companies.
The risks may include:
Accordingly, investors should not select a Small Cap Fund merely on the basis of its recent or past returns.
Suppose an investor invests ₹1,00,000 in a Small Cap Fund.
If the investment appreciates by 20%, its value becomes approximately ₹1,20,000.
However, if market conditions turn adverse and the fund declines by 25%, the investment value would fall to approximately ₹75,000.
A subsequent 25% rise from ₹75,000 would increase the value only to approximately ₹93,750, and not back to ₹1,00,000.
This demonstrates an important investment principle: a percentage loss requires a higher percentage gain to recover the original investment value. A 25% decline, for example, requires approximately a 33.3% subsequent gain to return to the original value.
Small Cap Funds should generally be viewed as long-term equity investments rather than short-term return opportunities.
Even fundamentally sound small-cap companies may experience extended periods of weak performance. An investor should therefore consider whether he/she has an adequate investment horizon and the ability to remain invested through periods of substantial market volatility.
A longer investment horizon may provide time for underlying businesses to grow and for the investor to withstand market cycles, but a longer holding period does not guarantee positive returns or eliminate risk.
Investment in a Small Cap Fund can generally be made through a lump sum or Systematic Investment Plan (SIP).
A SIP spreads investments over different market levels and may reduce the risk associated with investing the entire amount at a particular market level. However, SIP does not guarantee profits or protect an investor against losses in a declining market.
A Small Cap Fund need not constitute the investor's entire equity portfolio. Its allocation should be considered in the context of the investor's overall portfolio, financial position, investment objectives, risk profile, investment horizon and ability to withstand losses.
Diversification across different asset classes and categories can help avoid excessive dependence on the performance of a single market segment.
Particular care may be required where an investor:
The suitability of an investment should therefore be assessed on the basis of the individual investor's circumstances rather than age or recent market performance alone.
Small Cap Funds are market-linked investments. Neither the principal invested nor any particular rate of return is generally guaranteed.
Past performance, including periods of exceptionally high returns, should not be considered an assurance or indication that similar returns will be achieved in future.
Before investing, investors should understand the scheme's investment objective, portfolio, Risk-o-Meter, investment strategy, liquidity, costs and material risks and refer to the latest SID, KIM, SAI, factsheet and other applicable scheme documents.