Nippon India Small Cap Fund Bonus

About Nippon India Small Cap Fund – Bonus

Nippon India Small Cap Fund is a small-cap equity mutual fund offered by Nippon India Mutual Fund. It primarily invests in equity and equity-related securities of small-cap companies, which have a market capitalization below the top 250 companies listed on the stock exchange. A bonus in mutual funds is a form of distribution of profits by the fund house to its unit holders. It is generally in the form of additional units of the fund issued to the existing unit holders in proportion to their existing holdings. The bonus is given from the accumulated profits of the fund, and it does not affect the net asset value (NAV) of the fund.

Key Parameters for Investing in Nippon India Small Cap Fund – Bonus

Nippon India Small Cap Fund is a mutual fund that invests primarily in small-cap companies. Any investments should be made with a few aspects in mind that will assist the investor in making sound financial decisions. Here are some key parameters to consider before investing in this fund:

• Fund Performance: The fund’s past performance is an important factor to consider. Investors should compare the fund’s historical returns with its benchmark index and peer group funds. Additionally, investors should analyse the fund’s performance during various market cycles to understand its ability to generate returns in different market conditions.
• Investment Objective: Investors should assess the fund’s investment objective to ensure that it aligns with their investment goals. The Nippon India Small Cap Fund aims to provide long-term capital appreciation by investing in small-cap companies.
• Fund Manager: The fund manager plays a crucial role in the fund’s performance. Investors should evaluate the fund manager’s experience, track record, and investment style to gain confidence in their ability to manage the fund’s portfolio effectively.
• Portfolio Composition: Investors should analyse the fund’s portfolio composition to understand the level of diversification, sector allocation, and stock selection. Additionally, investors should evaluate the risk-reward profile of the portfolio and its suitability for their investment objectives and risk appetite.
• Expense Ratio: The expense ratio is the annual fee charged by the fund house to manage the fund. Investors should compare the expense ratio of the Nippon India Small Cap Fund with its peer group funds to ensure that they are not paying higher fees.
• Investment Horizon: Small-cap funds can be volatile in the short term and may require a longer investment horizon to realise their full potential. Investors should assess their investment horizon and ensure it aligns with the fund’s investment objective and risk appetite.
• Asset Under Management (AUM): Investors should also consider the fund’s AUM, as a large AUM may impact the fund’s ability to generate alpha or outperform the benchmark index. However, a small AUM may also result in liquidity issues and impact the fund’s performance.

Taxation on Nippon India Small Cap Fund – Bonus

The bonus units would be treated as dividends if you received a bonus unit through a dividend reinvestment option. They will be subject to dividend distribution tax (DDT) of 25% plus surcharge and cess. On the other hand, if you have received a bonus unit through the growth option, it will be treated as a capital gains distribution and subject to capital gains tax. If the bonus units are held for more than 12 months, they will be considered long-term capital gains and taxed at a rate of 10% (plus surcharge and cess) on gains exceeding Rs. 1 lakh. If the bonus units are held for less than 12 months, they will be considered short-term capital gains and taxed at the investor’s income tax slab rate.

Holdings on Nippon India Small Cap Fund – Bonus

With the majority of holding on miscellaneous companies, the listed top three companies that Nippon India Small Cap Fund – Bonus is invested include Tube Investments of India Limited with 3.79% holdings, Triparty Repo with 2.98% holdings, and HDFC Bank Limited with 1.81% holdings. Moreover, the chemical sector, IT – Software sector, and Private Banks are some of the sectors in which the Nippon India Small Cap Fund – Bonus is heavily invested.

Returns on Nippon India Small Cap Fund – Bonus

Small-cap funds typically invest in stocks of small-cap companies, which are companies with relatively small market capitalisation. These funds are generally considered riskier than large-cap funds but also have the potential for higher returns. In the context of mutual funds, a bonus is an additional amount of money paid out to investors in addition to the regular returns on their investment. Bonuses may be paid out from profits generated by the fund, or the mutual fund company may fund them.

The Investment Objective of Nippon India Small Cap Fund – Bonus

Nippon India Small Cap Fund – Bonus is a small-cap equity fund managed by Nippon India Mutual Fund. Small-cap funds typically invest in companies with small market capitalisations, which have the potential for high growth but also carry higher risks. This fund aims to provide long-term capital appreciation by investing primarily in small-cap stocks.

Minimum Investment and Lock-in Period

The minimum investment amount for Nippon India Small Cap Bonus Funds is Rs. 5,000; subsequent investments can be made in multiples of Rs. 1,000. The lock-in period for Nippon India Small Cap Bonus Funds is three years. This means that investors are not allowed to redeem their units before the completion of three years from the date of allotment. However, if investors redeem their units after three years, they may be eligible for certain tax benefits, as per prevailing tax laws.

Nippon India Asset Management Company Information

Nippon India Asset Management Company (formerly Reliance Nippon Life Asset Management Limited) is one of India’s leading asset management companies. The company manages a wide range of mutual funds, including equity funds, debt funds, hybrid funds, exchange-traded funds, and more. The company was established in 1995 as Reliance Capital Asset Management Limited. In 2019, Nippon Life Insurance Company acquired a majority stake in the company, leading to the name change to Nippon India Asset Management Company.