HDFC Small Cap Fund: Make Your Investment Simple Now

Introduction to HDFC Small Cap Fund

Do you know the next big investing opportunity that bigger investors tend to overlook? Its HDFC Small Cap Fund has huge growth space and offers high returns by investing in small-cap funds. This makes it easier for investors who looking to tap into long-term growth.

These funds specialize in finding undervalued small-cap funds with huge potential for growth. Because larger investors often ignore these funds, this is a great opportunity to earn high profits. In this article, you’ll explore HDFC Small Cap Mutual Fund. What is the investment strategy, and how does it boost investment without compromising stability? Keep reading on to get all your answers.

What is HDFC Small Cap Fund?

The HDFC Small Cap MF is an equity mutual fund that invests in small-cap stocks. Its market cap is small compared to mid-cap and large-cap funds, but this is what makes it different. This small cap fund offers higher returns to its investors. Although these firms invest in small-cap stocks, this helps to make high returns. Not great returns, but it also gives you the privilege to manage your funds. This reduces the risk because all your money is not in one type of fund. Because the firm offers high returns, this is what makes it risky compared to other funds. Market situations and investors’ behaviour can make sudden changes in the market. So if you’re planning to invest in the long term, investing in a small-cap fund can be beneficial for you.

Investment Strategy of HDFC Small Cap Fund

This scheme’s primary strategy for investing is to ensure the least exposure of 65%. This shows that investors avoid any stock that doesn’t seem to grow by 65%. This approach to investing leads to reducing the risk and making a significant profit.

Additionally, it also has a diverse portfolio that spreads investments across different industries. It helps to reduce market risk because all your money is not in one fund.

Who Manage HDFC Small Cap Fund?

HDFC Small Cap Mutual Fund is managed by Mr. Chirag Setalvad. He has great experience of 20 years in fund management and equity research.

Over the last few years, He helped thousands of investors achieve financial growth. His approach to managing funds and equity research always makes his investors profitable.

He is main focus is to understand the market and invest in stocks that have the potential to make a profit. His belief in long-term growth always leads him to make higher profits for his investors.

Should you invest in HDFC Small Cap Fund?

Now one question comes to mind, is it good to invest in an HDFC Small Cap Fund? Well, the answer varies. Before you go with any fund, you have to identify which one is better for you.

Things like your investment goals, risk tolerance, etc. decide which fund to go with. Let’s understand one by one:

1. Investment goals

 If you have a plan to invest your money where your main focus is to grow your returns over time, then investing in a small-cap fund would be beneficial for you.

2. Risk tolerance

The small-cap fund often comes with higher risk, but it provides great returns in the long term. These funds are a great choice for you if you’re a risk taker and manage short-term losses.

3. Time horizon

The small-cap fund aims for long-term growth to reduce the risk and achieve great returns. Investing for at least 5 to 6 years can make you high returns.

4. Financial situation

Your financial situation also has a significant role in your investment. It decides which fund is a good fit for you. If you have financial strength, then taking small-cap fund risk is advisable.

5. Diversification

If you don’t have a higher risk tolerance, then diversification can be good. It reduces the risk by spreading investment into different stocks.

Limitations on investing in HDFC Small Cap Fund

The HDFC Small Cap Mutual Fund known for its long-term returns and higher growth. Yet, it also comes with some limitations that an investor should consider

1.Higher volatility

The HDFC Small Cap Fund primarily focuses on small-cap stocks. Due to market fluctuations, these funds have to face higher volatility which can reduce the prices for short time.

2. Long-term investment

These funds need a long-term investment horizon to produce high returns. That’s why it doesn’t promise good returns for the short term.

3. Concentration risk

Every fund’s performance depends on sectors and stocks. If sectors and stocks underperform, it can reduce the market size and returns.

4. Stability

If the market is unstable, it impacts the investor’s sentiments. This incident can reduce the market size and of course, return on investment.

5. Higher risk

Due to investing in small-cap sectors, it involves higher risk and a long period of time. If you’re not ready to face significant risk, then it’s better to avoid these funds.

6. Suitability

This scheme is not suitable for everyone. If you’re seeking a steady income then these funds are not a safe option.

7. Exit load

This small cap stock imposes an exit load of 1% on the redemption amount. It means if you redeem or switch units within one year of the date of allotment. No exit load is applied if you do it after 1 year.

The Scheme offers great returns, but it also has some limitations. So it is wise to research and identify your goals before investing in this small cap fund.

Conclusion

The HDFC Small Cap Mutual Fund is a great option for making your investment, but it also has its pros and cons. It comes with high risk and high returns. As an investor, your job is to define your financial goals before jumping into small-cap funds. This is how you can meet your goals, but if you’re unsure about it, then starting a SIP would be a much better option for you. It’s a more convenient way for you to double your annual investment. Invest a fixed amount for a specific duration, and you’ll see how your money will rise every year.