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🧾 Bajaj Finserv Small Cap Fund – NFO Review

"Graphic showing 'Small Cap Funds' with coins being dropped into a large bag by a hand, watched by two farmers, featuring the Bajaj Finserv logo."

NFO Period: 27th June 2025 to 11th July 2025Category: Equity – Small Cap Fund Type: Open-ended Equity Scheme Benchmark: BSE 250 SmallCap TRI

Introduction

Bajaj Finserv Mutual Fund has launched its new offering — Bajaj Finserv Small Cap Fund, with the New Fund Offer (NFO) open from 27th June to 11th July 2025. The scheme aims to generate long-term capital appreciation by investing primarily in equity and equity-related instruments of small cap companies.

Small caps are often considered the growth engine of the future — but they come with higher volatility and risk. Let’s review the scheme in detail to assess its suitability for investors.

Investment Objective

The fund seeks to provide long-term capital appreciation by investing in companies ranked 251st and below by full market capitalization, as per SEBI’s small cap definition. The strategy follows a bottom-up stock selection approach with flexibility to allocate tactically outside the small cap universe.

Note: There is no assurance that the investment objective will be achieved.

Key Features

  • Fund Type: Open-ended equity scheme investing in small caps

  • Minimum Investment: ₹500 and in multiples of ₹1 thereafter

  • Plans: Regular and Direct

  • Options: Growth and IDCW

  • SIP Availability: Daily, Weekly, Monthly, Quarterly

  • Exit Load: 1% if redeemed/switched within 6 months (after 10% of units)

Asset Allocation Strategy

  • 65%–100% in equity and equity-related instruments of small cap companies

  • Up to 35% in:

    • Mid and large cap companies

    • Debt and money market instruments

    • REITs and InvITs (max 10%)

    • Foreign securities including overseas ETFs (max 25%)

The scheme offers both core small cap exposure and diversification flexibility through satellite allocations.

Market Outlook – Is This the Right Time?

While equity markets, including small caps, are currently trading at elevated levels, long-term investors can use volatility to their advantage. Systematic investing strategies like SIPs or STPs are highly recommended in the current environment.

India's economic momentum, capex revival, and growing investor participation continue to support the long-term potential of small cap equities.

Who Should Invest?

This fund may be suitable for:

  • Investors with a long-term horizon (minimum 5–7 years)

  • Those comfortable with market fluctuations and volatility

  • Investors looking to diversify into emerging businesses with high growth potential

This fund may not be suitable for:

  • Short-term investors

  • Risk-averse individuals

  • Investors needing regular income or capital protection

Key Differentiators of Bajaj Finserv Small Cap Fund

  • True-to-label small cap focus as per SEBI categorization

  • Tactical flexibility through exposure to debt, REITs, and overseas markets

  • Modern SIP features:

    • SIP Top-Up

    • SIP Pause

    • Wealth SIP with SWP

    • STP & SWP options

  • Backed by Bajaj Finserv’s brand and regulated investment process

Pros & Considerations

Strengths:

  • Access to potential wealth creators in the small cap segment

  • Multiple investment options and cash flow planning tools

  • Compliant structure and investor-centric features

Points to Consider:

  • New fund with no past performance data

  • Suitable only for investors with high risk appetite

  • Potential for high short-term volatility


Performance Comparison: Leading Small cap funds

Here is the performance of some existing Small cap funds. This would give an idea to investors on how these funds have performed in medium to long term. Returns indicated here are annualized returns.


📊 Small Cap Funds – Regular Plan Comparison

Fund Name (Regular Plan)

1-Year Return (%)

3-Year CAGR (%)

5-Year CAGR (%)

Bandhan Small Cap Fund

17.0%

31.1%

38.0%

Quant Small Cap Fund

3.1%

27.4%

46.6%

Tata Small Cap Fund

6.3%

22.3%

36.2%

HDFC Small Cap Fund

2.0%

21.8%

35.2%

Invesco India Smallcap Fund

5.5%

24.3%

38.0%

Franklin India Smaller Companies Fund

4.7%

23.2%

37.1%

HSBC Small Cap Fund

1.9%

19.8%

34.8%

LIC MF Small Cap Fund

3.9%

19.6%

32.0%

Nippon India Small Cap Fund

3.2%

22.0%

39.0%

Bank of India Small Cap Fund

7.0%

20.4%

36.5%


*Returns shown above are as on 20 Jun, 2025

📊 NFO Key Details

Feature

Details

NFO Opens

27th June 2025

NFO Closes

11th July 2025

Scheme Reopens

Within 5 business days from allotment

Minimum Investment

₹500 (and in multiples of ₹1 thereafter)

SIP Options

Daily, Weekly, Monthly, Quarterly

Exit Load

1% if redeemed within 6 months (after 10% free units)

Riskometer

Very High (both scheme and benchmark)

Plans Available

Regular & Direct

Options

Growth, IDCW (Payout/Reinvestment/Transfer)


Conclusion

The Bajaj Finserv Small Cap Fund presents a compelling option for investors seeking long-term capital appreciation through the small cap space. The fund combines disciplined asset allocation with modern investment tools to support structured, goal-oriented investing.

As always, investors should evaluate their own financial goals, time horizon, and risk profile before making any investment decision.


⚠️ Disclaimer

Mutual Fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. This article is for informational purposes only and does not constitute investment advice. Please consult your financial advisor for personalized recommendations.

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*Investors should consult their financial advisors if in doubt about whether the product is suitable for them Note: The above information has been sourced from the Scheme Information Document provided by Bajaj Finserv AMC. Read the entire document before investing, Disclaimer: Jaiprakash (ARN/Distributor - 70524; brand name Vasundhra Investment) is the distributor of the mutual fund. Please consult your investment advisor before investing

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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The author of this Blog is a AMFI registered Distributor. None of his blog or articles to be treated as advice of investments. These are just educational in nature.

 

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme.

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