HDFC Small Cap Fund Regular Growth vs. Nippon India Arbitrage Fund IDCW
What's the Difference?
HDFC Small Cap Fund Regular Growth and Nippon India Arbitrage Fund IDCW are two different types of mutual funds with distinct investment strategies. HDFC Small Cap Fund focuses on investing in small-cap companies with high growth potential, aiming for long-term capital appreciation. On the other hand, Nippon India Arbitrage Fund IDCW follows an arbitrage strategy, aiming to generate returns by exploiting price differentials in the cash and derivatives markets. While HDFC Small Cap Fund carries higher risk due to its focus on small-cap stocks, Nippon India Arbitrage Fund offers a more conservative investment option with lower risk. Investors should consider their risk tolerance and investment goals before choosing between these two funds.
Comparison
| Attribute | HDFC Small Cap Fund Regular Growth | Nippon India Arbitrage Fund IDCW |
|---|---|---|
| Category | Small Cap Equity | Arbitrage |
| Minimum Investment | ₹5,000 | ₹5,000 |
| Expense Ratio | 1.85% | 0.92% |
| Return Rate | 12.45% | 6.78% |
Further Detail
Overview
HDFC Small Cap Fund Regular Growth and Nippon India Arbitrage Fund IDCW are two popular mutual funds in the Indian market. While both funds aim to provide investors with good returns, they have different investment strategies and risk profiles.
Investment Strategy
HDFC Small Cap Fund Regular Growth primarily invests in small-cap companies, which are known for their high growth potential but also higher volatility. The fund manager of HDFC Small Cap Fund Regular Growth carefully selects small-cap stocks that have the potential to outperform the market in the long run.
On the other hand, Nippon India Arbitrage Fund IDCW follows an arbitrage strategy, which involves taking advantage of price differentials in different markets. The fund manager of Nippon India Arbitrage Fund IDCW aims to generate returns by simultaneously buying and selling securities in different markets to profit from price imbalances.
Risk Profile
Due to its focus on small-cap stocks, HDFC Small Cap Fund Regular Growth is considered to be a high-risk investment. Small-cap stocks are more volatile and can experience sharp price fluctuations, which can lead to higher returns but also higher losses.
On the other hand, Nippon India Arbitrage Fund IDCW is considered to be a low-risk investment. The arbitrage strategy employed by the fund helps to mitigate market risk, as the fund aims to profit from price differentials rather than market movements.
Performance
When it comes to performance, HDFC Small Cap Fund Regular Growth has historically delivered strong returns during bull markets. However, the fund can underperform during bear markets due to the higher volatility of small-cap stocks.
On the other hand, Nippon India Arbitrage Fund IDCW has a more stable performance track record, as the arbitrage strategy helps to generate consistent returns regardless of market conditions. The fund may not deliver as high returns as HDFC Small Cap Fund Regular Growth during bull markets, but it can provide better downside protection during market downturns.
Expense Ratio
Expense ratio is an important factor to consider when investing in mutual funds, as it directly impacts the returns received by investors. HDFC Small Cap Fund Regular Growth has a higher expense ratio compared to Nippon India Arbitrage Fund IDCW, as actively managed funds like HDFC Small Cap Fund Regular Growth incur higher management fees due to the research and analysis involved in selecting small-cap stocks.
Conclusion
In conclusion, HDFC Small Cap Fund Regular Growth and Nippon India Arbitrage Fund IDCW are two distinct mutual funds with different investment strategies and risk profiles. Investors looking for high growth potential and are willing to take on higher risk may consider HDFC Small Cap Fund Regular Growth, while those seeking a more stable and low-risk investment option may opt for Nippon India Arbitrage Fund IDCW.
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