Nippon India Small Cap Fund

Diversified

Equity

India Micro Cap

Others

Small Cap

Aggressive growth Investor Profile

Investor Profile

1–7 yearsInvestment Horizon

HNI, UHNI, Retail Investor, Mass AffluentTarget Segments

SEBI registered equity mutual fund suitable for all investor categoriesRegulatory Fit

Nippon India Small Cap Fund - Growth invests in smaller Indian companies for higher growth potential with higher risk.

What This Strategy Does

Nippon India Small Cap Fund - Growth is an equity small-cap fund which captures India's emerging companies through a bottom-up stock selection approach, deploying capital across industrials, financials, and consumer sectors to achieve broad-based earnings growth.

CW Expert Research Notes

Consistent Outperformance

The fund has demonstrated consistent outperformance across market cycles, delivering benchmark-beating returns in 9 out of the past 12 years while exhibiting strong downside protection characteristics.

Differentiated Construction

The fund's differentiated construction, with a bias towards mid-cap stocks and overweight positions in industrials and financials, coupled with high-conviction bets like Jindal Steel and Tata Motors, sets it apart from peers.

Structural Growth Catalysts

The fund is well-positioned to capitalize on structural growth catalysts like India's infrastructure capex cycle and rising consumer spending, while its reasonable valuation relative to history provides an attractive entry point.

Performance and Risk Analysis

Historical returns, volatility patterns, and how this fund has performed relative to its benchmark.

Fund Performance

0.9% AnnuallyAlpha

+17.1% vs +9.9% benchmarkSince Inception

+14.0% vs +6.3% benchmark3Y Annualized

+18.5% vs +6.5% benchmark5Y Annualized

Nippon India Small Cap Fund

Benchmark Index

Benchmark Performance Comparison

Nippon India Small Cap Fund

NIFTY 50

Risk Profile

Standard Deviation22.6%

Maximum Drawdown-23.4% | Oct 2024

Sharpe Ratio0.29

Beta0.88

Upside Capture87%

Detailed Risks

Market Risk

Prolonged economic slowdown in India could dampen consumer demand, impacting small-cap earnings.

Liquidity Risk

Elevated volatility or risk-off sentiment could strain liquidity for small-cap holdings.

Concentration Risk

Significant mid-cap tilt exposes fund to idiosyncratic risks in specific sectors.

Specific Strategy Risk

Regulatory changes impacting key small-cap sectors could disrupt growth projections.

Strategy Details

A closer look at the investment thesis, portfolio construction, and current holdings.

Core Investment Theme

Provides exposure to India's entrepreneurial energy before institutional capital discovers it. Small caps offer the highest growth potential but demand patience through volatility cycles. The long-term impact is dramatic wealth creation—historical data shows sustained small-cap investing has generated life-changing returns, but requires conviction to stay invested through sharp drawdowns.

Broader Market View

Market Outlook

With equity markets appearing to normalize after the recent correction, the present environment offers an attractive entry point as consumption and earnings recover. Macro tailwinds such as reviving capex and credit growth align with the strategy's tilt towards consumer, financial services, and technology sectors, though risks like margin pressures persist.

Why This Strategy is Attractive Now

The strategy seems well-positioned, with exposure to market leaders across consumer cyclicals/defensives, financials, and technology. Its diversification across around 70 holdings, balanced between growth and stability, coupled with a moderate beta and flexibility, appears conducive to risk-adjusted participation in the normalization phase.

Investment Style & Process

Investment Style

The portfolio exhibits characteristics of a Quality Growth approach, emphasizing companies with durable competitive advantages, consistent earnings growth, and reasonable valuations across a mix of large and mid-cap market segments.

Why it Makes Sense

In the current environment of moderating economic growth and elevated uncertainty, a focus on quality businesses with pricing power, recurring revenue streams, and strong balance sheets may provide a degree of defensiveness while participating in secular growth opportunities.

High-Level Investment Process

Sourcing: The strategy appears to source investment candidates through a combination of quantitative screening for quality metrics and fundamental research into long-term business drivers and competitive positioning. Selection: Security selection likely emphasizes companies with sustainable competitive advantages, healthy profitability, strong balance sheets, and attractive growth runways, balanced against reasonable valuation multiples. Construction: Portfolio construction suggests an emphasis on prudent diversification across sectors and market capitalizations, with individual position sizes aligned with risk/reward perspectives and conviction levels.

Portfolio Holdings Overview

SectoralAllocation

Technology6.98%

Utilities3.65%

Capital Goods36.63%

Energy & Infra1.38%

Consumers25.01%

Services10.31%

Financial Services16.04%

Geographic Allocation

Domestic100%

Top Stock Holdings

CompanySectorAllocation

Triparty RepoUtilities2.70%

HDFC Bank LtdFinancial Services1.89%

Multi Commodity Exchange of India LtdFinancial Services1.76%

Bharat Heavy Electricals LtdCapital Goods1.67%

TD Power Systems LtdCapital Goods1.54%

Apar Industries LtdCapital Goods1.49%

Karur Vysya Bank LtdFinancial Services1.29%

Zydus Wellness LtdConsumers1.21%

State Bank of IndiaFinancial Services1.18%

NLC India LtdUtilities1.18%

Fund House Management

The asset management company’s track record, AUM scale, and fund manager credentials.

Fund Manager Track Record

Kinjal Desai

Ms. Kinjal Desai has experience of 14 years. Manages 509 funds at Nippon Life India Asset Management Ltd with an AUM of approximately ₹2,00,334 Cr Holds a M.sc degree.

43 years

Combined Team Experience

₹ 2,68,621 Cr

Assets Under Management

Samir Rachh

Co-Portfolio Manager

Mr. Samir Rachh has experience of 28 years. Manages 8 funds at Nippon Life India Asset Management Ltd with an AUM of approximately ₹68,287 Cr Holds a B.com degree.

CW Expert Take

Nippon India focuses on fundamental research with contrarian tendencies. Their investment teams are known for taking differentiated positions backed by bottom-up analysis. The fund house demonstrates flexibility in asset allocation while maintaining risk discipline—useful across their equity growth strategies and duration management in debt.

Firm Overview

Total AUM₹6,44,104.16 Cr

Investment Philosophy & Approach

Disciplined Approach

Nippon Life India Asset Management follows a disciplined investment approach.

Risk Management

The fund house emphasizes robust risk management practices.

Long-Term Focus

Nippon Life India Asset Management maintains a long-term investment horizon.

Operational & Regulatory Details

What it costs to invest, transaction mechanics, and regulatory disclosures you should know.

Costs and Fees

Total Expense Ratio (TER)1.42%

Exit Load1

Regulatory & Tax Information

INF204K01HY3

ISIN

DailyDealing Frequency

Nifty Smallcap 250 TR INRBenchmark

LTCG | >1Year 12.5%% on gain above 1.25 Lakh

STCG | <1Year 20%%

Tax Implications (India)