Fund of Fortnight

Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.[EasyDNNnews:PaidContentStart]

Reason for recommendation
Small-Cap investing tends to reward patience when market sentiment is uneven. After a phase of volatility, select small-cap companies are beginning to see earnings traction, improved balance sheets, and better operating leverage. For investors with a long-term horizon and an appetite for interim fluctuations, this phase offers an opportunity to accumulate quality small-cap exposure through disciplined fund management.

In this context, Bandhan Small Cap Fund has demonstrated commendable consistency relative to its category. Over shorter periods, the fund has shown better downside control, delivering -3.22 per cent over three months compared with the category average of -3.40 per cent, and a positive 0.70 per cent return over six months versus a -0.71 per cent decline for peers. The real strength, however, lies in the medium to long term. Over two, three, four, and five years, the fund has delivered 19.46 per cent, 29.71 per cent, 20.82 per cent, and 26.72 per cent, respectively; consistently outperforming the category averages across all these periods. Sectorally, the portfolio is well balanced, with a meaningful allocation to financials at 21.10 per cent, reflecting a measured exposure to credit-led growth. Healthcare (11.05 per cent) and services (9.96 per cent) add earnings resilience, while Construction (7.99 per cent) and consumer staples (6.01 per cent) provide cyclical and defensive balance.

On risk-adjusted metrics, Bandhan Small Cap Fund compares favourably with peers. A beta of 0.92, along with a Sharpe ratio of 1.20 and Sortino ratio of 1.90, indicates efficient risk management and superior downside protection within the category. With a diversified stock basket led by names such as Sobha Ltd., REC Ltd., and South Indian Bank, the fund avoids concentration risk while retaining upside potential. Overall, Bandhan Small Cap Fund emerges as a disciplined choice for investors seeking long-term small-cap participation with a relatively balanced risk profile.

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