Introducing Tata Small Cap Fund
Do you want to Fuel up your future growth financially? If yes, then just tap into the Tata Small Cap Fund to make your dream into reality. The scheme was started by a well-known trustworthy fund house Tata Mutual Funds.
The purpose of launching this scheme is to generate superior earnings. This involves investing in small-cap companies or newly listed firms, which have a market capitalization of less than Rs. 5000 Crores.
Additionally, the scheme was launched in the year 2018 on November 12. The scheme invests in all the small cap firms of different sectors and brings benefits from all of them for you. In addition, the sector allocation of the scheme is industries, materials and others.
Moreover, the top company holdings of the scheme are Kirloskar Pneumatic, Godrej Industries and others. Furthermore, the scheme has given a very good return rate of 28.89% since its launch.
With extensive knowledge of market statistics, the team manages total assets of Rs. 9463.7784 crores. The scheme covers 50.11 % of small cap firms in the market. Also, the remaining covers the mid cap firms because of their moderate risk profile.
Furthermore, Mr. Chandraprakash Padiyar has been managing the scheme since October 19, 2018. In addition, Mr. Jeetendra Khatri has joined the scheme to manage the assets from October 03, 2023. With their hard work and efforts, the scheme has outperformed the benchmark NIFTY Small Cap 250 TRI.
Expanding your knowledge about the scheme, let’s explore the different aspects of it.
Is Tata Small Cap Good to Invest?
Here in this section, you will get to know about the features of the scheme:
- Long-term Investments
The small cap firms are on the verge of growth. Hence, they outperform the well-established firms over time. Thus, the scheme benefits with high earnings when the investments stay for a long time. That means the scheme gives good earnings when the investment is held for at least 4-7 years or longer.
- High-Potential Growth
The small cap firms are potentially strong to gain and compete in the market. Hence, the scheme’s investments in such firms give growth to your potential and make it strong. This strong potential makes you stand out in the market when the conditions are not in favor. Also, it makes you strong enough to balance your economy during such conditions.
- Investment Approach
The Tata Small Cap Fund is available with a distinct investing approach. These approaches make your investment process easy and convenient. The approaches are lump sum and systematic investment plans. The lump sum promotes one-time investments and then benefits you with alpha earnings. On the flip side, a systematic investment plan promotes a regular investing process.
- Fund Management
The scheme has a skilful crew that knows about the market traits and statistics. They listen to your requirements and understand your goals. Then design plans for you that reach your desired goals and benefit you with good earnings.
- Diversification
The scheme has investments in small cap firms of different sectors. These sectors are as follows materials, industries, consumer staples and others. Hence, in this way, it gives you a variety of advantages from different sectors. Moreover, gives your portfolio a rare look with investments in growing firms.
Despite many advantages, it is equally important to address the risk factors associated with the scheme.
What are the Risk Factors of the Tata Small Cap Fund?
Here are the mentioned risk factors of the scheme that you should know while investing in it:
- Market Fluctuations
The market is volatile. It has inherent ups and downs. To illustrate, when the market is not favorable and continuously facing downturns. It shows a significant effect on the productivity of the scheme. As a result, the scheme lowers your earnings.
- Liquidity Risk
The scheme has a liquidity challenge. It is quite difficult to manage the actual value while investing and redeeming. The continuous investment and redemption make changes in the actual value. Moreover, increases the expense ratio rate. Hence, your earnings will affected by this reason.
- Less Transparency
The small cap firms are less explored in the market. Thus, there is less information about the performance of these firms. Hence, this nature makes an issue of less clearance in the scheme about the productivity of the firms. As a result, it significantly affects your income if the firms are not doing well in the market.
- Less Stability
The small cap firms have potential to grow but have less stability than other market caps. To elaborate on this point, if the business is going against the market or facing continuous loss. Consequently, the Tata Small Cap Fund underperforms. Hence, the result is also reflected in your net earnings.
- High-Cost
The research and operational tasks for designing the plans take high charges. Furthermore, the liquidity cost makes the expense ratio of the scheme quite costly. As a result, the scheme makes your net earnings low.
With the knowledge of features and risks. Let’s understand the appropriateness of the scheme.
Who is Appropriate for the Tata Small Cap Fund?
Expand your knowledge about the scheme by learning the fitness criteria to invest in it:
- Growth Seeker
The motto of the scheme is to provide earnings for a long-term horizon. If you are seeking growth and financial goals that last long. Then the scheme gives you the benefit of consistent earnings for a long time.
- Strong Potential Seeker
The scheme’s inherent risks make your willpower strong. If you wish for strong potential growth. Then the scheme is suitable for you and makes you strong enough to stand out in the unfavourable market.
- Average Income Professionals
The scheme has a regular investing facility. If you are someone with average income sources or want to pursue your passion. Then the scheme is suitable for you to reduce your risks and manage your income.
- Diversification Seeker
The scheme invests in growing firms of different sectors. If you wish to explore and experience benefits from various sectors. Then scheme fills your portfolio with various investments in growing firms.
Let’s bind up the discussion of the scheme and take a quick recap of it in the summary.
Final Note
In short, the scheme reveals that small cap firms are small steps toward long-term growth. The scheme brings a basket full of benefits from different sectors. Along with many benefits like other funds this scheme also has some risks.
Are you ready to take advantage of the scheme but feel scared due to risk factors?
Then don’t worry and begin your journey with SIP investments and let your wealth journey soar. These investments offer the flexibility of a standard regular investing process. Moreover, it gives you a chance to start with a small amount of investment. Also, reduces your risk fear due to a fixed duration of interval. They can be easily adjusted later according to your financial goals or circumstances.
