This Small Cap Equity Mutual Fund Has Given 271% Returns, Should You Start SIPs?

The last few years have seen smallcap mutual fund delivering handsome returns and Quant Small Cap Fund is no exception. Let's take a look at some of the finer details of the fund and see whether it is worth starting SIPs.

Returns from Quant Small Cap Fund

Quant Small Cap Fund, which largely invests in small cap stocks, has given absolute returns of 270.52% in 3-years. When you annualize the returns over a 3-year period, the same is a whopping 54.68%.The 5-year returns on an annualized basis is 24%, which is still very good. Crisil has a 5-star rating for the Quant Small Cap Fund and also some others have a top rating for the fund, who tend to rate various mutual fund schemes. The assets under management from the scheme is Rs 2,555 crores. The fund has given higher returns than the category average over 1, 2 and 3 years, which makes it a highly rated fund.

Should you invest in the fund through SIPs?

The minimum amount of investment required by way of SIPs is Rs 1,000. Were investors looking to invest a lumpsum in the Quant Small Cap Fund, we would have advised some caution or discretion, given that the Sensex has hit a new record high of 63,000 points. However, since we are now talking of SIP investments every month, the risk gets comparatively lesser, as the law of averaging applies. For example, since you are investing in the SIP at the net asset value and if there is a sharp drop in the markets, the next month or the subsequent month, you would be buying at significantly lower NAVs, thus averaging costs. In short, the Sensex is at a record high and at the same time investors are investing through SIPs, which means risks are hedged, so it does make sense.

Prolonged period of downturn may impact returns

However, if you are investing now and there is a prolonged period of downturn, than returns could be dismal or even negative. Another factor to consider is that interest rates are also rising, which leaves investors with fixed income options as well. The RBI is likely to hike interest rates once again this week. High interest rates are not always the best for equities, as investors tend to weight options. Nevertheless, in the past we have seen some mutual fund schemes like Quant Small Cap Fund generate stupendous returns, which allows us to keep faith in mutual fund schemes.

Disclaimer

Mutual fund investments are subject to market risk. Read all scheme-related Terms and Conditions carefully before investing. The above-mentioned information is purely informational and doesn't guarantee any return. Greynium Information Technologies and the Author are not liable for any losses caused as a result of a decision based on the article.