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There is a significant gap in the world of small-cap mutual funds for Indian investors. The ecosystem needs a transformation, and the newly launched Bajaj Finserv Small Cap Fund might be what we need. It is likely to deliver strong returns due to its sophisticated forensic filtering strategies, as well as its overall better research-driven approach in the more overlooked portions of the market (NFO: June 27 to July 11, 2025). If you are looking for the best small-cap mutual funds India, this fund certainly warrants your attention.
Unlike any other fund, the Bajaj Finserv Small Cap Fund stands out because it can capitalize on the most attractive small-cap stocks from over 898 companies with a total market capitalization of ₹ 78 trillion. It invests in niche players, emerging sector disruptors, and even industry leaders. The opportunity for alpha generation is rich within this space. The fund’s investment team focuses on quality, maintaining a limited number of holdings that ensures stricter standards based on governance, capital efficiency, and sustainable earnings.
For both aspiring SIP investors and experienced wealth builders, the Bajaj Finserv Small Cap Fund (best small cap mutual funds India) offers a strategy aligned with long-term targets, especially during the current stage of Indian economic development.
Why Small Caps Matter More Than Ever?
- India’s small-cap universe has grown significantly, providing many opportunities:
- As of December 2024, there are 898 small-cap stocks with a market capitalization of over ₹ 2,000 crore.
- This segment’s total market capitalization is now $78 trillion, comparable to that of large caps from seven years ago.
- Many strong companies with high growth potential exist in this segment, covering niche sectors such as healthcare, technical textiles, and clean energy.
Why Choose Bajaj Finserv Small Cap Fund?
- Set Focus on Quality
- Provides governance on how efficient strategic decision making and supervision systems are in practice
- Management: Use of resources, remuneration policies, councils, and intermediate bodies. analyst helps spot issues and poor governance
- This is an alpha generation strategy, but usually small-cap stocks are ignored in such scenarios.
- Average analyst coverage drops sharply after the top 250 stocks
- Lower institutional ownership gives active fund managers an advantage
- Over 50% of SIPs in small-cap indices delivered 15%+ XIRR over a decade, while only 14% for large-cap funds
- Intelligent Portfolio Construction 3
- Unique portfolio consisting of 40-100 stocks
- No less than 65% small-cap exposure.
- Free selection of mid- and large-cap stocks for balance and liquidity needs
Historical Performance: A Strong Long-Term Case
| Period | Nifty Smallcap 250 TRI CAGR | Nifty 100 TRI CAGR |
|---|---|---|
| 10 Years | 13.4% | 12.5% |
| 20 Years | 16.3% | 14.7% |
| % SIPs with 15%+ Returns (10-year) | 53% | 14% |
Even during market cycles and corrections, small-cap stocks have historically performed better in bull markets. The patient investors get to reap the benefits of higher compounded returns.
Risk & Reward
- Managing Volatility. While small caps can be unpredictable, this fund’s thorough research and risk screening processes work to:
- Avoid speculative or overvalued stocks.
- Maintain sufficient liquidity.
- Build a diverse but focused portfolio for stability.
Ideal for Long-Term SIP Investors
- If you’re planning a long-term investment journey with Systematic Investment Plans (SIPs), this fund suits your needs:
- Captures volatility through rupee-cost averaging.
- Designed to capitalize on the compounding potential of small caps over 7 to 10 years.
- Provides a smoother experience through disciplined, goal-driven investing.
Key Scheme Highlights
- Fund Name: Bajaj Finserv Small Cap Fund (best small-cap mutual funds india)
- Type: Open-ended equity scheme focused on small caps
- Fund Managers: Mr. Nimesh Chandan, Mr. Sorbh Gupta (Equity), Mr. Siddharth Chaudhary (Debt)
- Benchmark: BSE 250 Small Cap TRI
- Entry Load: None
- Exit Load: 1% if redeemed within 6 months, beyond 10% the allocation
- Minimum Investment: ₹500
Frequently Asked Questions (FAQs)
What is the Bajaj Finserv Small Cap Fund?
An equity mutual fund that mainly invests in small-cap companies.
What is the NFO period?
This NFO will be available for investment from June 27 through July 11, 2025.
How much of the fund is invested in small-cap stocks?
At least 65% of the fund's corpus is invested in small-cap stocks.
Who should invest in this fund?
It is ideal for long-term investors looking for high growth and willing to accept some volatility.
What makes this best small cap mutual funds india than others?
It utilizes in-house forensic analysis and thorough research to identify and avoid low-quality businesses.
Can I start a SIP in this fund?
Yes, SIPs are available and recommended for steady wealth creation.
Is this fund suitable during market corrections?
Yes. Market corrections often offer buying opportunities in quality small-cap stocks.
What are the fund's liquidity strategies?
The fund maintains strong liquidity monitoring across stock, investor, and distributor levels.
What's the exit load policy?
An exit load of 1% will be charged if over 10% of the investment is withdrawn within 6 months.
How can I invest in the best small-cap mutual funds india?
You can invest through Bajaj Finserv Mutual Fund's official platform or registered distributors, such as Nivesh.
