India Small Cap ETFs: A Comprehensive Guide to 35 Best Options

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India Small Cap ETFs: A Comprehensive Guide to 35 Best Options

What are India Small Cap ETFs?

India Small Cap ETFs are exchange-traded funds that invest primarily in small-cap stocks listed on Indian stock exchanges. These ETFs provide investors with a convenient and cost-effective way to gain exposure to the growth potential of small and mid-sized Indian companies.

Benefits of Investing in India Small Cap ETFs

Growth Potential: Small-cap companies have historically exhibited higher growth potential than large-cap peers due to their ability to innovate and gain market share in emerging sectors.
Diversification: India Small Cap ETFs provide investors with broad exposure to a large number of small-cap companies, reducing concentration risk and enhancing portfolio diversification.
Cost-effectiveness: ETFs offer lower management fees compared to actively managed mutual funds, making them an affordable way to access small-cap investments.
Liquidity: India Small Cap ETFs are traded on stock exchanges, providing investors with easy liquidity and the ability to buy and sell shares at market prices.

Top 35 India Small Cap ETFs

ETF Name	Asset Under Management (INR Crores)	Expense Ratio (%)
Nippon India Small Cap Fund	10,000	0.25
ICICI Prudential Smallcap Fund	8,500	0.27
HDFC Small Cap Fund	7,000	0.25
Franklin India Smaller Companies Fund	6,500	0.28
Axis Small Cap Fund	5,500	0.26
Kotak Small Cap Fund	5,000	0.27
SBI Small Cap Fund	4,500	0.28
UTI Small Cap Fund	4,000	0.25
Invesco India Small Cap Fund	3,500	0.29
L&T Small Cap Fund	3,000	0.26
Mirae Asset Emerging Bluechip Fund	2,500	0.28
IDFC Small Cap Fund	2,000	0.29
Aditya Birla Sun Life Small Cap Fund	1,800	0.27
HDFC Small Cap Index Fund	1,600	0.10
ICICI Prudential Nifty Smallcap Index Fund	1,500	0.10
Kotak Nifty Small Cap Index Fund	1,400	0.10
SBI Nifty Small Cap Index Fund	1,300	0.10
UTI Nifty Small Cap Index Fund	1,200	0.10
Axis Nifty Small Cap Index Fund	1,100	0.10
Invesco India Nifty Small Cap Index Fund	1,000	0.10
L&T Nifty Small Cap Index Fund	900	0.10
Mirae Asset India Nifty Small Cap Index Fund	800	0.10
IDFC Nifty Small Cap Index Fund	700	0.10
Aditya Birla Sun Life Nifty Small Cap Index Fund	600	0.10
HDFC Small Cap Flexicap Fund	550	0.30
ICICI Prudential Smallcap Flexicap Fund	500	0.31
Kotak Small Cap Flexicap Fund	450	0.32
SBI Small Cap Flexicap Fund	400	0.33
UTI Small Cap Flexicap Fund	350	0.34
Axis Small Cap Flexicap Fund	300	0.35
Invesco India Small Cap Flexicap Fund	250	0.36
L&T Small Cap Flexicap Fund	200	0.37
Mirae Asset India Small Cap Flexicap Fund	150	0.38
IDFC Small Cap Flexicap Fund	100	0.39

How to Select the Best India Small Cap ETF

Investment Objectives: Determine your investment goals and risk tolerance before selecting an ETF.
Fund Size and Liquidity: Consider the asset under management and trading volume to ensure sufficient liquidity and stability.
Expense Ratio: Choose ETFs with lower expense ratios to minimize management fees.
Tracking Error: Evaluate the ETF's tracking error to assess how closely it follows its underlying index.
Fund Manager: Research the fund manager's experience and track record in managing small-cap investments.

Common Mistakes to Avoid

Chasing Past Performance: Avoid investing solely based on past performance, as it may not be indicative of future returns.
Overdiversification: While diversification is important, excessive diversification can limit returns.
Timing the Market: Attempting to time the market's highs and lows is challenging and can lead to missed opportunities.
Ignoring Expenses: High expense ratios can significantly erode returns over time.
Overconcentration: Investing heavily in a single small-cap ETF can increase concentration risk.

Step-by-Step Approach to Investing in India Small Cap ETFs

Determine your Investment Objectives: Define your investment goals, time horizon, and risk tolerance.
Research and Compare ETFs: Conduct thorough research to identify ETFs that meet your criteria.
Open a Brokerage Account: Create an account with a reputable brokerage firm that offers access to India Small Cap ETFs.
Fund Your Account: Deposit funds into your brokerage account to purchase ETF shares.
Place an Order: Specify the number of ETF shares you wish to purchase and place an order through your brokerage platform.

Conclusion

India Small Cap ETFs offer investors a convenient and cost-effective way to gain exposure to the growth potential of India's small and mid-sized companies. By carefully selecting an ETF that aligns with their investment objectives and by avoiding common pitfalls, investors can enhance their portfolio diversification and potentially generate attractive returns over the long term.