It’s visible that the small-cap stocks have gone in a major downfall in the past six months. Many investors are in doubt for making further investments in the small-cap category. But, in the past six months, when Nifty smallcap 250 TRI has given the returns of -7.60%, a fund that has capped the losses and given returns of -1.11% is Reliance Small Cap Fund. The financial analysts of MySIPonline have researched the past performance and returns of the fund along with its portfolio, which depicts that it’s capable of performing better than its index and peers. The details of the research have been provided in the write-up further. Let’s see why investing in Reliance Small Cap is wise in the current market situation.
Reliance Small Cap Fund is an equity-oriented mutual fund which invests its significant corpus in the small-cap stocks. The fund has proved its strength by delivering high-returns in a very short span.
Why Is Reliance Small Cap an Outstanding Fund?
If we look at the performance of the scheme since its launch, then it can be seen that it has never underperformed the benchmark as well as the category’s average returns. Even in the bearish market of 2011, the fund has managed to cap the losses better than its benchmark. It has been ranked the best scheme in its category on the basis of the past returns by our experts at MySIPonline.
The past compounded returns of the fund for various years show that it has efficiently outperformed its index and peers returns. The fund has even performed well in the past six months when most of the other schemes from the category were not performing well. All these returns show that the strategies of the fund management team have fitted best in every market cycle.
Current Asset Allocation of Reliance Small Cap Fund (G):
The fund has been investing in 103 companies currently, out of which, major allocation is done in small-cap businesses. However, the other funds of the category are investing in less than 100 companies. This shows that the asset allocation of the fund has been providing more diversification to the investors.
Besides this, if we look at the sector allocation of Reliance Small Cap Fund growth, the portfolio includes major allocation in chemical and engineering sectors, which are super sensitive sectors. However, the rest of the allocation is done in the FMCG, financial, and construction sectors which are cyclical sectors known for offering growth to investors in their capital at different market cycles.
Optimal Risk Measures of Reliance Small Cap Fund (G)
The scheme defined itself best when it performs well even in the extreme market volatility. This has been proved successfully by Reliance Small Cap. In the past three years, when other funds in the category have generated an alpha of 2.07%, it has delivered an alpha of 7.16%, (as on Aug 31, 2018). Its SD is also 19.46%, which is less than its benchmark as well as category, which depicts that the fund shows fewer fluctuations than other funds in the category.
Therefore, considering all the above measures, returns, and portfolio allocation, the financial analysts of MySIPonline say that the fund is ideal for high-risk appetite investors. Henceforth, the investors should start investing in Reliance Small Cap Scheme now, as the fund has begun recovering again after downfall due to tmarket correction.