Nippon India Small Cap: 4 stocks it bought in July. Own any?

Summary: Nippon India Small Cap Fund shook things up last month with four fresh entries and four complete exits. Among the buys were two newly listed companies, while one of the exits was a big-name pharma stock. Curious to know which ones made the cut, and whether they’re in your portfolio? Let’s dive in.

Nippon India Small Cap Fund isn’t just another name in the small-cap space; it’s the leader.

In the long run, the fund’s regular plan has clocked 20.55 per cent annualised returns, while its SIP performance is even more impressive. Thanks to the power of rupee-cost averaging (where you buy more units when prices are low and fewer when they’re high), SIP investors in Nippon India Small Cap have made over 23 per cent annualised returns. To put that in perspective, a Rs 10,000 monthly SIP for 10 years would have grown to Rs 41.12 lakh today.

The fund rarely falters when it comes to consistency, too. In the past 10 calendar years, the fund has outpaced its benchmark, the BSE SmallCap 250 TRI, every single year.

This strong track record explains why Nippon India Small Cap, rated five stars by us, is also the most popular small-cap fund in India. It manages nearly Rs 66,000 crore, almost double the second-largest, HDFC Small Cap (Rs 36,353 crore). Not surprisingly, it’s also one of the most searched funds on our Value Research platform.

Given the sheer interest in this fund, let’s take a closer look at its latest portfolio moves.

The four new buys last month

• Raymond Realty (The fund bought a 1.86 per cent stake last month; this got listed on the exchange recently)
• HDB Financial Services (This company got listed recently)
• LIC Housing Finance
• Piramal Enterprises

Four companies it exited completely last month

• Dr Reddy’s Labs
• Rallis India
• Capital Small Finance Bank
• Gabriel India

What you should know

One thing to note about this fund is its buy-and-hold approach. Its portfolio turnover ratio is just 12 per cent, which means the fund typically changes only a small slice of its holdings in a year. That’s very different from many other small-cap funds that shuffle their portfolios far more aggressively.

This patience shows up in its portfolio construction, too.

Nippon India Small Cap holds nearly 250 stocks. At first glance, such a sprawling portfolio may look like it could dilute returns. Many experts argue that managing such a large fund can be a disadvantage in the small-cap space because small-cap stocks are often illiquid, meaning the fund can’t easily buy or sell large chunks without affecting the price.

Yet, Nippon India Small Cap has defied this challenge so far. Its performance has not only kept pace but, in many stretches, outpaced more nimble, smaller funds. That speaks to the fund manager’s discipline and ability to spread risks across a wide set of companies without losing the return edge.

Now comes the real question: should you invest in this fund?

Strong past performance alone is never enough to make an investment decision. There’s no one-size-fits-all answer in mutual funds. What suits your friend or colleague may not suit you, because your risk appetite, time horizon and financial goals could be very different.

That’s where Value Research Fund Advisor comes in. Our platform doesn’t just highlight the best-performing funds, it helps you understand which ones are the best fit for you. With decades of data, rigorous analysis and expert recommendations, Fund Advisor can guide you to choose funds that align with your long-term plan. 

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Also read: Quant Small Cap just bought 5 new stocks. Do you own any?