SBI Small Cap Fund: What Makes it The Best for Your Portfolio?

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The SBI Small Cap Fund has established itself as a premier choice for investors seeking long-term growth through exposure to small-cap stocks.

SBI Mutual Fund, one of India’s most reputable asset managers, this fund has consistently delivered impressive results, outperforming many of its peers.

This article explores the key features, performance metrics, and benefits that make the SBI Small Cap Stock stand out among its peers.

From its diversified portfolio and experienced management to its strategic investment approach, this fund demonstrates why it’s a compelling addition to a well-rounded investment portfolio.

Whether you’re a seasoned investor or just starting, understanding what makes the SBI Small Cap Mutual Fund unique can help you make informed investment decisions aligned with your financial goals.

Key Features of SBI Small Cap Fund

The main aspects that make this scheme unique are as follows:

Consistent Outperformance

The SBI Small Cap Scheme has consistently outperformed its peers in the small-cap category. Over the past decade, the fund has generated impressive annualized returns of 25%, significantly exceeding the category average. This consistent outperformance is a testament to the fund’s effective investment strategy and disciplined management.

Diversified Portfolio

The fund maintains a well-diversified portfolio with investments spread across 40-50 stocks. This diversification helps mitigate company-specific risks and provides broad exposure to various small-cap opportunities. By investing in a wide range of sectors and companies, the fund ensures that it is not overly reliant on any single investment, thereby enhancing stability.

Experienced Management

Managed by an experienced team at SBI Mutual Fund, one of India’s largest and most reputable asset management companies, the SBI Small Cap Fund benefits from a disciplined investment process and prudent risk management. The fund managers’ expertise in identifying promising small-cap stocks and their commitment to rigorous research underpin the fund’s strong performance.

Volatility Protection

Despite the inherent volatility associated with small-cap stocks, the SBI Small Cap MF has demonstrated relatively lower volatility compared to its peers. This is achieved through careful stock selection and portfolio diversification. By focusing on fundamentally strong companies and maintaining a balanced portfolio, the fund manages to deliver steady returns while minimizing risk.

Suitability for Long-Term Investors

Small-cap funds like the SBI Small Cap Mutual Fund are best suited for investors with a long-term investment horizon of at least 7-10 years. This duration allows investors to benefit from the higher growth potential of small-cap companies while weathering short-term market fluctuations. The fund’s strong track record of long-term performance makes it an attractive option for investors aiming for substantial capital appreciation.

Performance Analysis of SBI Small Cap Fund

The performance of a fund shows the consistency with which it will deliver returns:

Recent Performance Vs Peers

The SBI Small Cap scheme has consistently ranked among the top performers in its category. Over the past three years, it has outpaced many of its small-cap peers, delivering robust returns even during periods of market volatility. The fund’s ability to maintain superior performance is a key reason for its popularity among long-term investors.

Return and Risk Metrics

While the fund has delivered high returns, it has also managed to keep its risk levels in check. The fund’s standard deviation, a measure of volatility, is lower than many other small-cap funds, indicating more stable performance. This balance between high returns and controlled risk makes the SBI Small Cap Mutual Fund a correct choice for risk-aware investors.

What are the top-performing stocks in the SBI Small Cap Fund?

The SBI Small Cap Fund has a diverse portfolio with several top-performing stocks. Here’s a closer look at some of the key holdings that have driven the fund’s performance:

Blue Star Ltd.: A prominent consumer discretionary company, Blue Star Ltd. makes up 4.21% of the fund’s portfolio. Over the past year, its portfolio weight has fluctuated between 3.33% and 4.71%, consistently ranking it among the top holdings.

Kalpataru Power Transmission Ltd.: This capital goods company accounts for 3.97% of the portfolio. It has maintained a stable position in the fund’s top 10 holdings, showcasing its strong performance and reliability.

Finolex Industries Ltd.: A key player in the chemicals sector, Finolex Industries Ltd. represents 3.25% of the fund’s assets. It has been a steady top holding throughout the past year, reflecting its robust performance.

GE T&D India Ltd.: Another significant capital goods company, GE T&D India Ltd., comprises 3.11% of the portfolio. Its consistent presence in the top 10 holdings highlights its importance to the fund’s strategy.

Chalet Hotels Ltd.: This services sector stock makes up 3.03% of the fund’s assets. Its strong performance has kept it among the top holdings in the portfolio.

These top stocks span across various sectors such as consumer discretionary, capital goods, chemicals, and services, illustrating the fund’s diversified approach to small-cap investing. The fund’s strategic investment in these outperforming small-cap stocks has significantly contributed to its long-term success, consistently outperforming its peers.

Taxation Implications on SBI Small Cap Fund

The tax implications levied on this scheme are calculated in the following manner:

Short-Term Capital Gains (STCG)

If investments in the SBI Small Cap MF are redeemed within one year, the returns are subject to a short-term capital gains tax of 15%. This tax applies to the gains made on the investment during the short-term holding period.

Long-Term Capital Gains (LTCG)

For investments held for more than one year, the long-term capital gains are taxed at 10%, provided the total long-term capital gains exceed ₹1 lakh in a financial year. This favourable tax rate makes long-term investing in the SBI Small Cap Stock more attractive, as it allows investors to maximize their post-tax returns.

How to Invest in SBI Small Cap Fund?

Minimum Investment

The minimum investment for the SBI Small Cap Scheme is ₹500 for both lump sum investments and systematic investment plans. This low entry barrier makes the fund accessible to a wide range of investors, including those who are just starting their investment journey.                                                                                                      


The SBI Small Cap Mutual Fund stands out as an excellent choice for investors seeking long-term capital appreciation through exposure to small-cap stocks. Investors with a long-term horizon can start an early SIP to take advantage of the compounded returns.

Its consistent outperformance, diversified portfolio, experienced management, and effective volatility protection make it a compelling addition to any well-diversified investment portfolio. However, potential investors should carefully assess their risk tolerance and investment goals before committing to this high-risk, high-reward fund. With a long-term investment horizon and a disciplined approach, the SBI Small Cap stock can help investors achieve substantial growth and meet their financial objectives.

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