SBI Small Cap Fund: Most Reliable Fund for Wealth-Building

Introduction

The financial market is not stable, but when you invest in the SBI small cap fund, you can expect stability. Because it has proven its potential for growth by showing more than 23% returns in the last 10 years.

A small cap giant in the market, which you know as the SBI small cap scheme, was started in 2009 by the SBI Mutual Fund. If you look at this fund's past performance, the only thing you will say that how a small cap fund can perform consistently for 10 years. This is the result of a strong investing strategy and fund manager R. Srinivasan's expertise. But wait. Can this fund also have the potential to make you strong returns in the long term? Well, after this article, you will be able to find your answer.

In this article, you will explore its investing strategy, SIP investment, and why it is good for long-term investing. So, make sure you do not miss any points.

What is the SBI Small Cap Fund?

SBI small cap scheme, a small category fund that is known for its consistency. In 2009, when the small cap market was growing, the SBI mutual fund launched its fund in the small category. Even though the fund is not too old but it has gained popularity among investors. The biggest proof of this is SBI small cap fund returns, which go positive even though the Nifty Small Cap Index fell by 13% in the last year.

In the beginning, the fund AUM (asset management company) was only Rs 2,200 crores. As the fund has grown, its AUM has taken a leap and now it is Rs 31,227 crores. Even if you think small cap funds are risky but these statistics will persuade you to invest in the fund.

Now, when talking about its growth, it is important to know how the fund invests.

Investment Strategy of SBI Small Cap Fund

The past performance SBI small cap fund is proof of the fund's strong investing style. If you look at its investing strategy, it focuses on investing right, diversifying funds, and active management.

First, the fund targets those quality stocks that have long-term growth potential. It uses a bottom-up strategy to identify stocks with great valuation, performance, and growth. Once it picks the stocks, it spreads your portfolio into different sector stocks. It reduces risk, but is also helpful to achieve sectoral growth.

While it spreads your portfolio but a team of mutual fund experts also changes your portfolio allocation on a regular basis. In simple words, these fund managers consistently analyse the market, and whenever any sector performs well, it increases your portfolio allocation towards that sector.

Now lets take a look at some of the advantages provided by this fund.

What are the Advantages of the SBI Small Cap Fund?

Now you are thinking about how the SBI small cap fund is good for you. This is where you should see its advantages:

1. Quality Investment

Even small cap market fluctuates a lot, but you do not need to worry. Because the fund helps you to invest in quality companies with bottom-up selection. It only selects stocks based on great performance, low risk, and growth potential,l which are the qualities of a good stock.

2. Early Investment in Growing Companies

The fund helps you to invest early and win big. It gives you an opportunity to invest in small companies that can become mid cap tomorrow. When you invest early, you get the chance to boost your returns when these companies grow.

3. Disciplined Investing

This fund decreases the risk of losing a large sum with disciplined investing. It provides a systematic investment plan where you only invest a fixed amount at set times. You can also use the SBI small cap fund calculator to know how your systematic investment will perform.

Now, it's time to move to the section where you know the man behind this fund's growth.

Who Manages SBI Small Cap Mutual Fund?

The person who made the SBI small cap scheme so successful is R. Srinivasan. With a strong 30 years of experience, he is managing the fund as a CIO (Chief Investment Officer).

His strategy really adds value to the SBI small cap fund returns and its presence proves this. It has been 16 years from the date of fund launched but he is the only person who is still managing the fund. This long-term presence in the fund shows that he has a lot of experience. Because it managing the fund for a long time, he knows how to manage the fund performance in difficult situations.

Under his guidance, the fund crossed 20 Lakh of SIP investments, which is crazy. It is hard to believe, but his strategies helped the fund deliver 10x returns in the last 9 years.

Now you are thinking why the fund is good for long-term investment. Well, the next section will show you.

Why SBI Small Cap Fund is Good for Long-Term Investment?

If you are planning to invest for 5-7 years, then these factors will show you why SBI small cap scheme is best for long-term investment:

1. Well Diversified Portfolio

The fund is not totally risk-free but it reduces the risk with the help of diversification. It spreads your portfolio into different sectors like healthcare, finance and industrials in a systematic way. This is how the fund is not depends on one sector which increases long-term growth.

2. SIP Investment Option

You can invest through a systematic investment plan that uses compounding that reinvest your money again and again to build high returns. When you invest for the long term, you benefit from compounding to make more returns. You can even use SBI small cap fund calculator to know how your systematic investment will perform.

3. Experienced Fund Manager

As you know, Srinivason is the fund manager who has been managing the fund for a long time. It means he knows how to handle the market volatility and economic changes. His experience gives a confidence to make high returns in the long term.

Finally, its time to conclude this article and see whether you should invest in the fund.

Final Thoughts

In short, the fund's past performance proves why it holds a strong position in the mutual fund market. On one side, where investor feels insecure about investing in small cap funds due to high volatility, this fund is gaining the attention of investors. After reading this article, you know the answer is its strong investing strategy and experience of R. Srinivasan. In simple words, if you can take risks but invest for the long term, then investing in the fund is a great choice.

While risk is a common thing for small cap funds, you can invest through a SIP plan to reduce this risk. You can start your investment by putting a small amount at set times, which is better than putting a large sum. Because you are not investing large, you decrease the risk of losing big.