Bandhan Small Cap Fund: This fund has 31.48% CAGR in 5 years, NAV at 39.34; check details

The recent sharp decline in mid and small-cap stocks is making many rethink their investment in smallcap funds. Small-cap stocks have been particularly hard hit during the recent market correction, with the BSE Smallcap index dropping by more than 22% since reaching its all-time high on December 12. This has also negatively impacted the performance of mutual funds.

Investors have historically favored small-cap mutual funds due to the potential for rapid growth in smaller yet resilient companies. One such smallcap mutual fund is Bandhan Small Cap Fund, which will complete 25 years this month. Launched on February 25, 2020, Bandhan Small Cap Fund Direct Growth remains a significant player in the small-Cap sector, overseen by experienced fund managers including Manish Gunwani, Kirthi Jain, Ritika Behera, and Gaurav Satra.

The scheme has given a return of 31.48% since its inception. 

Scheme Name	1-Month Return	3-Month Return	1-Year Return	3-Year Return	5-Year Return	Since Inception
Bandhan Small Cap Fund	-7.26	-13.15	10.36	25.00	31.48	31.48
BSE 250 Small Cap - TRI	-9.48	-16.18	-4.48	18.48	23.66	10.18
NIFTY 50- TRI	N/A	N/A	N/A	N/A	N/A	N/A

B Padmanaban, a Certified Financial Planner, noted: "The 5-year anniversary of Bandhan Small Cap Fund is being celebrated!  Since its inception on March 26, 2020, during the peak of the COVID-19 epidemic, the fund has accomplished nothing short of extraordinary. Within a month of launching, its NAV down to 8.18. On 11th December 2024, it sets a record high of 48.975 NAV, nearly five times. With a staggering 31.48% CAGR in 5 Years, the most recent NAV is 39.34, nearly 4 times in 5 years! This is after the 20% correction. It is topping the chart on 2 Year, 3 years, 4 Years as No. 1. Bandhan Small cap No. 2  position in 1 and 5 Years."

 

Fund at a glance

Fund structure as on 31-January-2025

Equity: 92.21%
Large Cap: 5.4%
Mid Cap: 11.53%
Small Cap: 75.28%
Other Cap: 0%
Debt: 0.05%
Other: 7.74%

Top holdings

Triparty Repo TRP_030225: 7.88
Sobha Limited: 2.88
LT Foods Limited: 2.72
The South Indian Bank Limited: 2.50
PCBL Chemical Limited: 2.22
Cholamandalam Financial Holdings Limited: 1.97

Bandhan Small Cap Fund vs other small-cap funds

Scheme	Launch Date	1-Year Return (%)	3-Year Return (%)	5-Year Return (%)	Expense Ratio (%)
Bandhan Small Cap Fund	Feb 25, 2020	10.36	25.00	31.48	1.72
Nippon India Small Cap Fund	Sep 16, 2010	0.07	21.78	28.42	1.45
HDFC Small Cap Fund - Regular Growth Plan	Apr 03, 2008	-3.32	19.68	24.71	1.59
SBI Small Cap Fund	Sep 09, 2009	-1.02	14.88	21.31	1.59
Quant Small Cap Fund -Growth	Oct 16, 1996	-9.04	21.79	38.26	1.63
Axis Small Cap Fund	Nov 29, 2013	2.04	16.27	21.31	1.61

Investing in small-cap mutual funds

The recent sharp decline in mid and small-cap stocks has been predominantly driven by domestic mutual funds, high net worth individuals (HNIs), portfolio management services (PMS), and alternative investment funds (AIF) selling off their holdings in this sector. Small-cap stocks have been particularly hard hit during the recent market correction, with the BSE Smallcap index dropping by more than 22% since reaching its all-time high on December 12. This has also negatively impacted the performance of mutual funds.

Both mid and small-cap indices have experienced declines of 20-25% from their peak levels, surpassing the decreases seen in the Sensex (14%) and the Nifty (15%) from their respective record highs in September of last year.

Investors have historically favored small-cap mutual funds due to the potential for rapid growth in smaller yet resilient companies.
Small-cap mutual funds have always been a favourite of investors, and the reason is clear — small but strong companies have the potential to grow rapidly. 

When these companies grow, their stocks generate big returns, sometimes even higher than mid and large-cap companies. But, with this high return comes the risk as well, as small-cap funds are more sensitive to market volatility. However, in the medium to long term, these funds have performed well and have often given better returns than mid and large-cap funds.

Market analysts advise that investors should refrain from engaging in panic selling within the mid and small-cap sectors. Instead, utilize the current correction as an opportunity to acquire high-quality stocks that possess sturdy fundamentals at more favorable valuations.