Tata Small Cap Fund, one of the leading schemes from Tata Mutual Fund, has made headlines by delivering exceptional returns for investors. In just five years, a lump sum investment has multiplied by over four and a half times, while a Systematic Investment Plan (SIP) in the fund has yielded more than three times the invested amount. These impressive returns have made the Tata Small Cap Fund a favorite among investors looking for long-term wealth creation in the small-cap segment.
Investment Strategy of Tata Small Cap Fund
The Tata Small Cap Fund follows a growth-oriented investment strategy, aiming to invest in companies that have the potential to significantly increase their profits over the next 3-4 years. The fund focuses on small-cap companies that are trading at reasonable valuations and have a strong balance sheet.
Given the inherent risks associated with investing in smaller companies, the fund manager aims to provide superior risk-adjusted returns by carefully selecting stocks with high growth potential. The investment philosophy of the fund is based on “Growth at a Reasonable Price” (GARP), ensuring that the selected companies not only have strong profit potential but are also valued fairly.
By focusing on companies that can outperform market expectations, the Tata Small Cap Fund seeks to deliver superior returns in the long term.
Impressive Performance of Tata Small Cap Fund
The Tata Small Cap Fund has consistently outperformed its benchmark index, the NIFTY Smallcap 250 TRI, across different time periods. Here’s a snapshot of its performance:
- 5-Year Returns: 35.31% (Direct Plan), 33% (Regular Plan)
Benchmark Return: 31.17% - 3-Year Returns: 27.71% (Direct Plan), 25.59% (Regular Plan)
Benchmark Return: 23.60% - 1-Year Returns: 50.24% (Direct Plan), 48.11% (Regular Plan)
Benchmark Return: 47.24%
These figures clearly show that the fund has consistently outperformed its benchmark, delivering excellent returns to its investors. Whether through lump sum investments or SIPs, the Tata Small Cap Fund has proven its ability to generate substantial returns in both the short and long term.
How Tata Small Cap Fund Multiplied Wealth
Lump Sum Investment Returns
For those who invested a lump sum amount of Rs. 1 lakh in the Tata Small Cap Fund five years ago, their investment has grown to Rs. 4.65 lakh. This means the initial investment has multiplied by more than 4.5 times, showcasing the wealth creation potential of the fund.
- Lump Sum Investment: Rs. 1 lakh
- Investment Period: 5 years
- Current Value: Rs. 4,65,740
SIP Returns: Over 3X Growth
Investors who opted for a SIP in the Tata Small Cap Fund have also been handsomely rewarded. A monthly SIP of Rs. 5,000 over five years has now grown to Rs. 9.28 lakh, providing more than three times the return on the total invested amount of Rs. 3 lakh.
- Monthly SIP: Rs. 5,000
- Investment Period: 5 years
- Total Investment: Rs. 3 lakh
- Current Value: Rs. 9,28,295
Key Details of Tata Small Cap Fund
- Scheme Launch Date: November 12, 2018
- Assets Under Management (AUM): Rs. 9,119.57 crore (as of October 23, 2024)
- Expense Ratio: 0.29% for Direct Plan, 1.68% for Regular Plan
- Minimum SIP Investment: Rs. 100
- Minimum Lump Sum Investment: Rs. 5,000
- Fund Managers: Chandraprakash Pediar and Jitendra Khatri
- Exit Load: 1% on redemptions above 12% within 12 months; no exit load after 12 months.
Sector and Stock Allocation of Tata Small Cap Fund
The Tata Small Cap Fund maintains a diversified portfolio, with its primary focus on small-cap stocks. Here’s the sectoral allocation of the fund:
- Capital Goods: 18.21%
- Chemicals: 10.97%
- Services: 10.58%
- Financial Services: 8.91%
- Healthcare: 8.74%
- FMCG: 5.08%
- Realty: 4.77%
- Consumer Services: 4.66%
- IT: 4.18%
- Consumer Durables: 4.08%
The top 10 holdings of the Tata Small Cap Fund include:
- BASF India Ltd. – 6.05%
- Godrej Industries Ltd. – 4.00%
- Quess Corp Ltd. – 3.99%
- IDFC Ltd. – 3.53%
- Kirloskar Pneumatic Company Ltd. – 3.21%
- Time Technoplast Ltd. – 2.98%
- Elantas Beck India Ltd. – 2.78%
- Anant Raj Ltd. – 2.65%
- UTI Asset Management Company Ltd. – 2.61%
- Suven Pharmaceuticals Ltd. – 2.60%
Why Choose Tata Small Cap Fund?
- Long-Term Growth Potential: The Tata Small Cap Fund focuses on capital appreciation in the long term, making it an attractive option for investors looking to grow their wealth.
- Small Cap Opportunities: By investing in small-cap companies with the potential for rapid growth, this fund provides an opportunity to capitalize on businesses that may become future market leaders.
- Risk-Adjusted Returns: The fund manager’s focus on “Growth at a Reasonable Price” ensures that the investments are made in companies with strong fundamentals, which helps to mitigate risk.
- Systematic Investment Plan (SIP): Investors can start with small amounts and benefit from rupee cost averaging over time. The fund has delivered significant returns through SIPs, proving to be a solid option for regular investors.
- Strong Past Performance: With a track record of outperforming its benchmark, the Tata Small Cap Fund has demonstrated its ability to generate superior returns, even in volatile market conditions.
Is Tata Small Cap Fund Right for You?
The Tata Small Cap Fund is best suited for investors with a high-risk appetite who are looking for long-term capital growth. Investing in small-cap companies comes with higher risk due to market volatility, but it also offers the potential for higher rewards.
Before investing, it’s important to assess your own risk tolerance and consult with a financial advisor to determine if the Tata Small Cap Fund aligns with your investment goals.
