Kotak small cap fund: 5 key things you should know before investing

The Kotak Small Cap Fund is a small cap equity mutual fund that is focused on primarily investing in lesser known, emerging businesses.

Now before considering investing in this mutual fund you should know about several key parameters such as the fund's inception, recent performance, basic investment strategy along with investor suitability to help you in making well informed prudent investment decisions, something that is imperative in today’s high inflation environment.

Here are five key things you should acknowledge and clearly know about before considering investing in this mutual fund scheme:

Overview and key features

The Kotak Small Cap Fund was launched in 2005. It is managed by Harish Bihani with a focus and mandate to invest in emerging businesses that have promise and high growth potential attached to them.

The fund is categorised under equity small cap and it is benchmarked against the Nifty Smallcap 250 TRI. Currently it is marked as ‘very high’ risk under SEBI’s risko-meter. The direct plan has an expense ratio of 0.57% as of April 30, 2025, which is fairly competitive as per industry standards.

Current NAV and valuation

As of May 13, 2025, the Kotak Small Cap fund’s NAV stood at ₹283.41, thus reflecting strong performance over the years. This particular metric reflects the per unit market value of the fund’s portfolio taking into consideration both capital gains along with underlying asset performance.

Performance track record

The fund has delivered consistent performance across timeframes. It has also displayed resilience during market downturns. Over the past year the fund has delivered a return of 6.45%. Its long term performance is elaborated below:

Source: Kotak Mutual Fund

Note: The returns discussed above are illustrative in nature. For complete details refer to the official website of Kotak mutual fund.

Total Assets Under Management (AUM)

As of April 30, 2025 the fund manages ₹15,867 crores in assets. This indicates strong investor interest and steady inflows of funds. The large asset under management (AUM) also helps in ensuring a stable base for the fund to maintain proper diversification and sustain volatility in the small cap market segment.

Investment approach and sector allocation

The fund focuses on a bottom up stock picking approach, thus identifying high quality small cap businesses across various sectors. It has a diversified exposure to healthcare, industrials, consumer discretionary and technology sectors.

This diversification helps in reducing volatility and cushioning risks along with broader participation in the long term growth story of India.

Who should consider investing in this mutual fund scheme?

This fund is best suited for investors who have a long term vision of holding on to equities for growth. Not only this, it is also important to acknowledge the high risk involved with investing in this fund. 

That is why investors who can tolerate short term market volatility and fluctuations should consider investing in this fund. Hence, the ideal investment profile consists of individual investors who are:

• Looking to diversify their portfolio with exposure to emerging businesses.
• Willing to stay invested for at least 5–7 years.
• Comfortable with higher NAV fluctuations in pursuit of superior long-term gains.

Investors should therefore, ideally consult a certified financial advisor to ensure that this fund aligns with their investment objectives and risk tolerance before considering investing in this fund.

Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.