Have you been searching for an investment option that promises significant long-term returns? If so, then the HDFC Small Cap Fund can be an exciting option. To take advantage of the growth prospects of developing companies, the fund focuses on small-cap stocks with exceptional growth potential. This fund is managed by HDFC mutual fund, it is the third largest asset management company of India. Its diligently designed investment strategy finds hidden treasures in the stock market. If you are patient and can withstand market volatility, this fund can help to create wealth for you in the long run.
In this article, you will learn about the fund manager, benefits, HDFC Small Cap Fund regular growth and many other things.
What is the HDFC Small Cap Fund?
This is a diversified equity mutual funds offered by one of the Top asset management companies in India. This fund was launched on April 2nd, 2008. The AUM of this fund is Rs.31,230 cr. It mainly invests in small cap stocks, targeting high-growth companies with the potential to become future market leaders. This is just like investing in a plant seed, and when it becomes a tre,e you can have nice sweet fruit.
This fund offers two plans, Hdfc small cap fund regular growth plan and direct growth plan. An investor can be a part of this giant fund by starting an SIP.
Let’s understand the strategy this fund uses to make a profit.
Investment Strategy for HDFC small cap Fund
Here are some of the investment strategies used by the HDFC small cap fund to make profits and sustainable growth:a
1. Growth Investing
HDFC small cap fund regular growth portfolio focuses on investing in high-potential companies, especially in new commodities or advanced industries so that the risk reduces and profit increases.
2. Value Investing
This mutual funds recognizes the existence of stocks that are cheap due to strong underlying fundamentals but are trading at very low prices and then it invests which helps in long term investment.
3. Top-Down & Bottom-Up Approach
The fund house conducts an examination both from a broad economic perspective, top-down and from specific bond selections bottom-up based on the type of the fund. These two approaches help mitigate the risk.
4. Sector Rotation Strategy
Rotating investments from one sector to another following the market phase and developments. This approach is based on economic cycles and sectorial performance which helps to make informed decisions.
After you know what the strategies this fund uses are, do you still know who the mastermind behind this small cap fund is? Let find out.
Who is the Fund Manager of the HDFC Small Cap Fund?
Mr. Chirag Setalvad is the fund manager of this small cap fund and the reason behind the HDFC small cap fund growth since its launch. He has over 25 years of experience and has been working with this fund since June 28, 2014. He has been with HDFC AMC since March 2007. Mr. Chirag has also worked with New Vernon Advisory Services and ING Barings N.V.
What are the Advantages of Using HDFC Small Cap Funds?
This fund comes with many benefits some of them are:
1. Growth Potential of Small Cap Companies
Small cap companies are considered riskier than large cap companies, but they still present an opportunity for higher returns over the long run. Such companies have a lot of room for growth and success, which further makes them more attractive for an investor to pour their money into.
2. Diversified Stocks and Bonds
Instead of going through the trouble of mixing and matching this small cap company on one’s own, the fund does it for the investor and provides them access to a diversified group of small cap companies. This mitigates the risk associated with putting money in a single small cap company and enables the investor to put their money with a great deal for profit.
3. Consistency
Year after year, this small cap fund has outperformed the benchmark with outstanding margins. It is evident from the track record available that the company knows how to manage and overcome market volatility while ensuring the best returns in the long run.
4. Ease of Access
Small time investors and beginners can also benefit from this wonderful opportunity as the fund can be accessed with a low SIP of Rs.100. This makes it easy for investors who do not want to make any huge upfront payments.
5. Strong Brand Packaging
As you know, it is managed by a strong mutual funds company that has the most reputed names in the financial industry. The benefits from a strong institutional framework and strong research capability make this fund more trustworthy and reliable for beginners as well as experienced investors.
Who Should Invest in HDFC Small Cap Fund?
As you know, the HDFC small cap fund is a high-risk market due to its small capitalization. So, it is generally suitable for the investors who:
1. Long-term investors
Investors with a long term outlook spanning 5 to 10 years or more are generally better positioned to ride out market downturns. Staying invested for a long time horizon helps investors to see HDFC small cap fund growth and reduce risk.
2. Risk Appetite
For those comfortable with higher risk the potential rewards of this small cap fund can be appealing, despite the possibility of short-term losses.
3. Fund Manager Expertise
Additionally, investors aiming to diversify their equity portfolios beyond large and mid cap stocks might find value in allocating a portion to small cap funds.
Thus, after understanding and learning about this funds benefits and investment strategy, now its time to conclude this article.
Conclusion
In short, this small cap fund provides investors with the potential for high returns by focusing on small cap companies with significant growth prospects. It is good to be invested in this for a long term period because of its volatility and unpredictable market changes. You can also start SIP in this fund to gradually increase your investment and monitor it. Hence, if you want to create ultimate wealth, then this fund is for you.
Tags: BusinessFinanceHDFC Small Cap Fund