Nippon India Small Cap Mutual Fund: Invest in Your Future Now

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Nippon India Small Cap Mutual Fund: Invest in Your Future Now


In the dynamic world of investing, small-cap mutual funds have become a compelling option for investors seeking to maximise returns and achieve their financial goals. Among these funds, Nippon India Small Cap Fund stands out for its potential to deliver high returns and diversify your portfolio.

After being launched on 5th September 2010, it has generated a CAGR of 22.25%. This means the returns that the fund has made since its inception. Nippon Mutual Fund House is a well-renowned fund house in the financial market.

With its systematic investment approach of buying small-sized companies at an early stage, this scheme has become the 1st performer in its category.

This article explores how Nippon India Small Cap stock can help you invest in your future now. Through the end of this post, you will easily be able to decide whether this scheme is the right fit for you or not. Let’s start our analysis.

Understanding Nippon India Small Cap Fund

Nippon India Small Cap Stock is an open-ended small-cap equity scheme that primarily invests in small-cap stocks, defined as companies ranked below the 250th position in terms of market capitalization. The fund aims to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of small-cap companies.

Benefits of Investing in Nippon India Small Cap Fund

Investing in any scheme requires a thorough analysis of understanding its benefits in your portfolio. It helps us in deciding whether we need it in our portfolio or not.

Here are some advantages offered by this scheme:

High Growth Potential

Small-cap stocks can deliver high returns, driven by their growth potential and innovative products.


Investing in small-cap funds diversifies your portfolio, spreading investments across various sectors and industries to reduce risk.

Long-Term Focus

Nippon India Small Cap Fund is designed for long-term investors, providing a stable and consistent investment approach.

To sum up, these above points will educate us what factors to look for when investing in any mutual fund scheme.

How do we Invest in Nippon India Small Cap Fund?

To invest in the Nippon India Small Cap scheme, follow these steps:

Step 1: Open an Account with a reputable mutual fund platform or financial institution that offers this scheme.

Step 2: Choose your investment amount, starting as low as Rs.1000 for your systematic investment plan.

Step 3: Select your investment period, ranging from one year to five years or more.

Step 4: Regularly monitor your portfolio and adjust your investments as needed to ensure alignment with your financial goals.

Tax Implications for Nippon India Small Cap Fund

When you invest in the Nippon India Small Cap Mutual Fund and make a profit, you need to pay taxes on your gains. Here’s how it works:

Short-Term Gains: If you sell your fund units within one year of buying them, you must pay a 15% tax on any profit you make. For example, if you buy units and sell them after six months with a profit of Rs.10000, you will pay Rs.1500 as tax.

Long-Term Gains: If you sell your fund units after holding them for more than one year, you must pay a 10% tax on any profit, but only if your total profit in a financial year exceeds Rs.1 lakh. For instance, if you make a profit of Rs.1.5 lakh in a year, you will pay 10% tax on Rs.50000 (the amount over Rs.1 lakh), which amounts to Rs.5000.

In summary, you pay a 15% tax on profits if you sell within a year, and a 10% tax on earnings over Rs.1 lakh if you sell after a year.

Suitability for Nippon India Small Cap Fund

  1. Long-Term Investors

If you have a long-term investment horizon, you should consider Nippon India Small Cap MF. Small-cap stocks often experience higher volatility in the short term but have significant growth potential over several years. By holding your investments for at least five to ten years, you can benefit from the fund’s growth potential.

  • Growth-Oriented Investors

If you are seeking high growth, this fund is a suitable option. Small-cap companies often have more room for growth compared to large-cap counterparts. By focusing on companies with strong growth prospects and innovative products, the fund offers the potential for substantial returns.

  • Risk-Tolerant Investors

If you can tolerate higher market fluctuations, you should consider this fund. Small-cap funds are inherently riskier than large-cap or mid-cap funds due to the volatility and higher risk associated with smaller companies. By being prepared for periods of underperformance, you can pursue higher long-term gains.

  • Diversified Portfolio Seekers

If you want to diversify your investment portfolio, you can benefit from adding Nippon India Small Cap Fund. By investing in various small-cap stocks across different sectors and industries, the fund helps spread risk and reduce the impact of poor performance in any single sector.

  • Experienced Investors

If you have some experience in equity markets, you might find this fund appealing. Understanding the dynamics of small-cap stocks and the market’s cyclical nature can help you make informed decisions and stay invested during volatile periods.


Investors aiming to benefit from the dynamic growth of small-cap companies can find a unique and compelling opportunity in the Nippon India Small Cap Mutual Fund. By investing via SIP in this fund with their investment strategy, investors can achieve significant long-term capital appreciation and diversify their portfolio across various sectors and industries. The fund’s emphasis on identifying innovative, high-growth potential companies makes it suitable for those who are growth-oriented, risk-tolerant, and have a long-term perspective.

Understanding the benefits and risks associated with small-cap investing is crucial. Adopting a disciplined, systematic investment approach and maintaining a diversified portfolio can help investors effectively navigate the complexities of this market segment. As small-cap companies continue to drive economic growth and innovation, Nippon India Small Cap stock stands out as a powerful tool for wealth creation and financial independence. If investors align with the discussed investor profiles, this fund could be an excellent addition to their investment portfolio, helping them achieve their financial goals and invest in their future now.

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