DerpyLlama

Axis Small Cap vs Nippon Small Cap

I want to start to invest in small cap funds. After eliminating multiple funds, I have come down to these 2. Since Nippon has stopped lumpsum investment, I will be investing through SIP and keeping lumpsum to put when small cap become less overvalued. Not able to decide which one to invest in as many are planning to exit from Axis one.

Need opinion as after analysis, they both share similar risk (in comparison to Quant).

11mo ago

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ZoomyMuffin

Stealth11mo

Size of the fund (AUM) matters a lot in small caps. You can eliminate the fund which has the highest AUM in SC funds.

Eg:SBI SC fund gave good returns when it started out. Now with so big AUM it isn't able to deliver high returns.

DerpyLlama

Flipkart11mo

But because of high diversification in portfolio and great management, Nippon is able to give good returns with very high AUM.

Thats why, confusion 😐

ZoomyMuffin

Stealth11mo

Do a 50-50 split then. SC funds: Diversifying away manager risk can help unless they have very high overlap.

My 2 cents: SC will be/shud be very small allocation of your overall portfolio. Very high diversification (>50 names, with top 10 concentration<50%) isn't going to contribute meaningfully.

GoofyQuokka

Morgan Stanley11mo

Why not quant tho?

DerpyLlama

Flipkart11mo

Its turnover ratio seem quite high. Want to divide the amount for SIP like 70% in either of the above and 30% in Quant

If you know this ratio hasn't affected much and given returns in both type market, may increase its contribution.

GoofyQuokka

Morgan Stanley11mo

Isn't that good especially in the current market?

SparklyKoala

TripAdvisor11mo

If it helps you can go to thefundoo.com/Tools/PortfolioOverlap to check for overlap between two mutual funds. That way you'll have a clearer picture of whether Axis is as good as Nippon (personally I put my money on Quant Smallcap MF though)