04-07-2025
Considering Bajaj Finserv Small Cap Fund NFO: A Strategy for Young Professionals
Small cap funds can offer investors a way to participate in the early growth stages of emerging companies. These funds typically invest in businesses with smaller market capitalisation, often beyond the top 250 listed companies. While small cap funds may offer strong returns over the long term, they also tend to be more volatile than large or mid cap funds. For investors seeking to gradually build exposure to this segment, a Systematic Investment Plan (SIP) with a step-up feature can be a relevant strategy. The Bajaj Finserv Small Cap Fund NFO is open till July 11, 2025.
The Bajaj Finserv Small Cap Fund NFO, which began on June 27, 2025, and is open till July 11, 2025, provides an opportunity to consider a portfolio that focuses on quality, value, and growth-oriented small cap companies.
Why Small Cap Funds May Be Suitable for Long-Term Investors
A small cap fund is designed to tap into the potential of growing businesses that may not yet be widely followed by the market. These companies may operate in niche segments or have innovative business models. While they carry higher risks, they may also offer the possibility of long-term capital appreciation.
Given their volatile nature, small cap funds may be more suitable for investors who can stay invested over extended periods and who are comfortable with interim fluctuations in portfolio value.
The Bajaj Finserv Small Cap Fund aims to address small cap volatility by following a 3-in-1 investment approach—focusing on quality businesses, scalable growth potential, and value-driven opportunities.
What is a Step-Up SIP?
A step-up SIP allows you to increase your SIP investment amount at regular intervals—such as annually orsemi-annually. This feature can be useful for investors who anticipate their income to rise over time and wish to adjust their investments accordingly.
Rather than starting with a high amount initially, you can begin with a comfortable sum and increase it as your financial capacity improves. This can help you accumulate more units over time and potentially build a larger corpus in the long run.
Step-up SIPs can be particularly suitable for young investors who may not have a large capital at their disposal. By starting with a manageable SIP and increasing it as their income grows, investors can gradually build towards a substantial investment amount. Additionally, with many years of investing ahead, young investors may have more room to potentially manage short-term volatility and access the long-term growth potential of small caps.
Potential Advantages of Stepping Up Your SIP in a Small Cap Fund
Supports Compounding: Regularly increasing your SIP amount allows more capital to be invested over time, which may enhance the compounding effect. Aligns with Income Changes: As your income grows, your investment can also grow, without putting undue pressure on your current budget. Aids in Managing Volatility: Spreading your investment over time and gradually increasing it may help reduce the impact of market swings—which can be a consideration in volatile segments like small caps. May Assist with Goal Planning: A step-up SIP can be linked to specific long-term financial goals, potentially making the investment journey more structured.
Utilising a SIP Calculator with Step-Up for Planning
A SIP calculator with a step up feature allows you to estimate how your investment may grow over time when you increase your SIP amount periodically. By entering details such as the initial SIP amount, step-up percentage, duration, and expected rate of return, you can obtain a projected corpus value.
For instance, starting with Rs. 5,000 per month and increasing it by 10% annually for 10 years in a small cap fund with an assumed return of 12% per annum may lead to a different corpus than maintaining a fixed SIP.
*For illustrative purpose only
Such calculators can help visualise the potential benefit of gradual increases in investment and can be useful in financial planning.
Conclusion
A step-up SIP in a small cap fund may be a practical way to gradually increase your exposure to high-growth companies while aiming to manage risk and align with your evolving financial goals. Using an SIP calculator with step up can assist in setting expectations and creating an investment plan. As with any investment decision, it is advisable to consult a financial advisor to ensure your approach suits your goals and risk profile.
The Bajaj Finserv Small Cap Fund NFO presents an opportunity to consider this journey with a structured approach. Units will be available at an offer price of Rs. 10 per unit during the NFO period (June 27, 2025 – July 11, 2025).
You can invest in the Bajaj Finserv Small Cap Fund online through the official Bajaj Finserv AMC website or authorised mutual fund distributors. To know more about the fund or to invest
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Note to the Reader: This article is part of Hindustan Times' promotional consumer connect initiative and is independently created by the brand. Hindustan Times assumes no editorial responsibility for the content.
