NFO Pick – (Helios Small Cap Fund)

20 Oct 2025 , 02:44 PM

WHY A SMALL CAP FUND NOW?

The big question is; why a small cap fund now, especially when institutional preference gravitates towards large caps; and at the most to mid-caps? There are 4 reasons.

• Smaller sized companies with a lower market cap have a much bigger canvas to grow given the right strategy and the right business environment. The key to small cap investing is to identify the 50 best performers and make the most of them.
• Small cap companies being niche business have lower levels of debt. This reduces their solvency risk substantially. Also, the small size makes them more flexible and also adaptable to change; especially when business models are in a state of flux.
• Small cap companies give better access to niche themes. For example, very niche picks like diagnostics, data centres, defence support, aerospace support, artificial intelligence, and robotics are more easily available in the small cap space.
• Small companies do not diversify as they do not have the fund access or the management bandwidth to take up more businesses. This turns out to be a blessing in disguise as their business models tend to be more focused, boosting innovation.

Small caps come with some inherent advantages, but the key is to identify the best performers and avoid the also-ran stocks.

HOW SMALL CAP FUNDS PERFORMED IN INDIA

In India, small cap funds have total AUM of ₹3,48,850 Crore across 31 small cap funds. Of these, the top-10 ranked by 5-year returns shown below have a combined AUM of ₹2,10,232 Crore. For the purpose of ranking, we have only considered small cap funds with a minimum legacy of 5 years.

Scheme Name	Return (%) 1-Year	Return (%) 3-Years	Return (%) 5-Years	Daily AUM (₹ in Crore)
Quant Small Cap Fund	-7.11	24.99	34.08	30,234.90
Nippon India Small Cap Fund	-7.49	23.02	32.82	68,135.55
Invesco India Smallcap Fund	-1.33	26.28	30.90	8,595.92
Bandhan Small Cap Fund	-3.59	30.11	30.55	16,603.57
HDFC Small Cap Fund	-0.92	23.12	30.11	37,708.11
HSBC Small Cap Fund	-11.65	19.98	30.05	16,457.37
Tata Small Cap Fund	-12.18	19.95	29.37	11,733.25
Franklin India Small Cap Fund	-9.52	21.80	28.96	13,568.92
Edelweiss Small Cap Fund	-6.20	20.36	28.85	5,216.66
Bank of India Small Cap Fund	-8.29	19.75	28.00	1,978.04
Data Source: AMFI (Returns above 1 year are CAGR)

 

Overall small cap funds have given average 1-year returns of -6.26%, while the top-10 funds ranked above have delivered 1-year average returns of -6.83%. How about 3-year returns? Small-cap funds have given average 3-year returns of 20.31%, while the top-10 funds ranked above have delivered 3-year average returns of 22.94%. Let us finally look at 5-year returns. Small cap funds have given average 5-year returns of 28.17%, while the top-10 funds ranked above have delivered 5-year average returns of 30.37%. Clearly, the leaders are distinctly outperforming the averages over longer time periods.

GLANCE AT HELIOS SMALL CAP FUND

Here are key details of the Helios Small Cap Fund.

• NFO opens on November 06, 2025 and closes on November 20, 2025. This open-ended fund will invest predominantly in small cap stocks as defined by AMFI.
• On the risk-o-meter, Helios Small Cap Fund is classified as “High Risk,” due to its substantial exposure to equities in general and small-cap stocks in particular.
• Helios Small Cap Fund is best suited to investors looking at a higher risk strategy for the long term to identify and grow with the leaders of tomorrow.
• The benchmark for the fund will be the Nifty Small Cap 250 TRI, which the fund will strive to outperform on a consistent basis over the long term. There are no guarantees.
• Minimum application amount in NFO is ₹5,000 and in multiples of ₹1 thereof. Additional subscriptions can be in multiples of ₹1,000. The fund will offer Regular Plans and Direct plans and will also offer the Growth Option, Dividend Option, and Reinvestment option.
• Alok Bahl and Pratik Singh will be the dedicated fund managers for the scheme. An exit load of 1% of sale value will be applicable if sold within 3 months of date of allotment.

Helios Small Cap Fund will be treated as an equity fund for tax purposes. Dividends will be taxed at the incremental rate of tax applicable to the investor. Short term capital gains – STCG (held for up to 12 months) will be taxed at 20.8% (including 4% cess). Long term capital Gains – LTCG (held for beyond 12 months), will be taxed at 12.5% over and above a base annual exemption limit of ₹1,25,000. There will be no indexation benefits available!