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Summary: The good news? Two actively managed mutual funds have quietly turned a Rs 1 lakh investment into over Rs 6 lakh in just 10 years. So, let’s find out the names of these mutual funds and then also look at their consistency in the long run.
The good news: two actively managed mutual funds have actually turned a Rs 1 lakh investment into more than Rs 6 lakh in just 10 years.
This isn’t some fanciful bull-market projection. It’s the power of nearly 20 per cent annualised returns sustained over a decade — a feat very few investments manage. And yet, a couple of small-cap funds have pulled it off.
No surprise then that small-cap funds are the current favourite of retail investors. In fact, this July, the small-cap fund category attracted net investments of nearly Rs 6,500 crore, the most among other diversified equity fund categories.
What does it take to sixtuple your money?
To grow sixfold in 10 years, a fund needs to clock an annualised return (CAGR) of around 19.62 per cent.
So, which two small-cap funds achieved this?
Fund #1: A masterclass in consistency
The first performer is Nippon India Small Cap Fund.
This fund has a five-star Value Research rating and delivered 21.18 per cent annualised returns in the last 10 years, much higher than the 19.62 per cent mark. It’s been the textbook example of steady small-cap investing.
We also looked at their rolling returns. Why? Point-to-point returns (like “10-year return”) only tell you what would have happened if you’d invested on a specific day and exited on another. But what if you had invested on a different day? That’s where rolling returns come in. They tell us how a fund performed over all possible five-year periods, using daily data. In short, rolling returns give us a much clearer picture of a fund’s consistency.
Now, that we know why rolling returns are important, here’s what we found based on its daily five-year rolling returns over the past five years:
- The fund delivered less than 10 per cent: Only 12 times (meaning, the fund delivered single-digit returns less than 1 per cent of the time)
- Delivered between 15–25 per cent: 622 times (50.3 per cent of the time)
- Delivered over 25 per cent: 487 times (39.4 per cent of the time)
That means out of more than 1,200 observations, the Nippon India small-cap fund delivered an annualised return of more than 15 per cent nearly 90 per cent of the time, demonstrating a high level of consistency.
Fund #2: Higher risk, higher peaks
The second name on this list is: Quant Small Cap Fund.
Rated four stars by Value Research, it has delivered 20.19 per cent annualised returns over the past decade. Slightly lower on the consistency scale, but with its own unique strengths.
Here’s how the small-cap fund’s daily five-year rolling returns stack up:
- Delivered less than 10 per cent: 101 times (8 per cent)
- Delivered 20–25 per cent: 427 times (34.5 per cent of the time)
- Delivered over 25 per cent: 559 times (45.26 per cent of the time)
Evidently, Quant Small Cap Fund is slightly more erratic. While it has had more low-return periods than Nippon, it also has a larger number of blockbuster return phases. In fact, the fund has delivered more than 20 per cent returns nearly eight out of 10 times, based on five-year rolling returns in the last five years.
Should you invest?
These two funds have delivered stellar performance. But a word of caution: past returns don’t guarantee future results. Especially in small caps, where volatility is high and market phases can swing wildly.
That’s why we recommend looking beyond return charts. Our Value Research Fund Advisor platform helps you identify mutual funds that are not only top performers, but also suitable for your goals, risk appetite and investment horizon.
Because great investing isn’t just about chasing past winners, it’s about building a portfolio that wins over time.
Also read: The second fund most long-term investors should have
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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