Nippon India Small Cap Fund — SIP Calculator

Fund Overview

Nippon India Small Cap Fund is one of the largest and most established small cap funds in India, with an AUM exceeding ₹74,600 crore. Launched in September 2009, the fund has navigated multiple market cycles including the 2013 taper tantrum, the 2018 small cap crash, and the 2020 COVID pandemic. It is managed by Siddharth Srivastava and Samir Rachh, who bring over 25 years of combined small cap research experience.

The fund invests primarily in companies ranked 251 and below by market capitalisation, following a bottom-up research approach to identify quality small cap businesses with sustainable growth potential. Its size and experience in the small cap category give it advantages in terms of market access and research depth.

Who Should Invest

This fund suits aggressive investors with a 10+ year investment horizon who can tolerate significant short-term volatility (40-50% drawdowns in severe bear markets). It works well as a satellite holding in a diversified portfolio, complementing core large cap or flexi cap holdings.

Small cap funds require patience — during the 2018 small cap bear market, the category fell 40-50% and took over 2 years to recover. Investors who exited during that period locked in significant losses.

Key Strengths

• Scale advantage — As one of the largest small cap funds, it has dedicated research resources and better access to company management
• Experienced management — The fund manager team has deep small cap expertise across multiple market cycles
• Defined exit strategy — The fund follows a disciplined framework for exiting positions when they reach target valuations or if fundamentals deteriorate
• Consistent long-term track record — Top quartile performance across 5 and 10 year periods

Risks to Consider

• Category risk — Small cap funds are the most volatile equity category; severe bear markets can erase 40-50% of value
• Liquidity risk — During market stress, small cap stocks can become illiquid, making it difficult to exit positions without impacting price
• Size constraint — The fund’s large AUM means it must invest across many small cap names, potentially diluting the impact of its best ideas
• Benchmark sensitivity — The Nifty Smallcap 250 TRI can be extremely volatile; the fund’s performance is heavily influenced by overall small cap market conditions

How It Compares

Within the small cap category, Nippon India Small Cap Fund has consistently ranked among the top performers over 5 and 10 year periods. Its Sharpe ratio is competitive with peers like SBI Small Cap and HDFC Small Cap due to its disciplined risk management approach.

The fund’s size is both a strength and a challenge — it provides stability and resources but limits agility compared to smaller small cap funds that can take concentrated positions in emerging opportunities.

Performance Context

During the 2020 COVID crash, the fund fell approximately 45%, in line with the small cap category. The recovery was strong — the fund more than doubled in value between March 2020 and December 2021 as small caps rallied.

The 2018 small cap crash was a significant test: the fund fell nearly 50% from peak to trough. Investors who maintained their SIPs through this period benefited from buying units at deeply discounted prices, and the fund eventually recovered to new highs.

Use Our SIP Calculator with This Fund

To see how a monthly SIP in Nippon India Small Cap Fund would have performed, visit our SIP calculator and select this fund. Test different investment periods including the 2018 crash and 2020 recovery to understand the impact of staying invested through volatility.