If you’re thinking about investing in small-cap funds, you’ve likely come across the Canara Robeco Small Cap Fund and the Axis Small Cap Fund. Both are popular choices, but how do you decide which one is right for you? This article will break down the key features, pros, and cons of each fund to help you make an informed decision.
Key Features
Canara Robeco Small Cap Fund
- Risk Level: Moderate to High: This fund takes on a moderate to high level of risk, which means it aims for higher returns but also comes with increased volatility. This is typical for small-cap funds, as they invest in smaller companies that have higher growth potential but also higher risk.
- Minimum Investment: The entry barrier is relatively low, making it accessible for most retail investors. This is a good starting point for those who are new to small-cap investments but want to test the waters without committing a large sum.
- Asset Allocation: The fund mainly focuses on small-cap stocks, which are companies with a smaller market capitalization. These companies often have more room to grow compared to large-cap stocks, but they also come with higher volatility.
Axis Small Cap Fund
- Risk Level: Similar to the Canara Robeco fund, the Axis Small Cap Fund also carries a moderate to high level of risk. This is suitable for investors who are willing to take on more risk for the potential of higher returns.
- Minimum Investment: The minimum investment requirement is also Rs. 5000, making it equally accessible for retail investors. This is beneficial for those who wish to diversify their portfolio without a hefty initial investment.
- Asset Allocation: The Axis Small Cap Fund also primarily invests in small-cap stocks. The focus is on identifying high-growth companies that have the potential to become future leaders in their respective sectors.
By understanding these key features in more detail, you can better assess which of these two small-cap funds aligns more closely with your investment goals and risk tolerance.
Performance Metrics
When it comes to performance, numbers speak louder than words. Here’s how each fund stacks up:
Canara Robeco Small Cap Fund
- 5-Year Returns: Approximately 15%
- Expense Ratio: Around 1.5%
Axis Small Cap Fund
- 5-Year Returns: Approximately 17%
- Expense Ratio: Around 1.2%
Pros and Cons
Every investment option has its upsides and downsides. Here’s what you need to know:
Canara Robeco Small Cap Fund
Pros
- Consistent performance over the years
- Managed by experienced fund managers
- Lower expense ratio compared to industry average
Cons
- Limited portfolio diversification
- Sensitive to market volatility
Axis Small Cap Fund
Pros
- Higher 5-year returns
- Lower expense ratio
- Good for long-term investment
Cons
- May include stocks with higher volatility
- Limited international exposure
Which One to Choose?
- Investment Goals: Both funds are suitable for investors looking for long-term growth. However, Axis Small Cap Fund may offer slightly higher returns, based on past performance.
- Risk Tolerance: If you are risk-averse, Canara Robeco might be a better fit due to its more conservative investment strategy.
- Fees and Charges: Both funds have competitive expense ratios, but Axis Small Cap Fund is slightly cheaper.
Choosing between Canara Robeco Small Cap Fund and Axis Small Cap Fund is not a simple decision. Both have their merits and drawbacks. Your final choice should align with your investment goals, risk tolerance, and the fees you are willing to pay. Always consult a financial advisor before making any investment decisions. By understanding the features and performance metrics of these two funds, you can make a more informed decision that aligns with your financial goals.
