Summary of "Bandhan Small Cap Fund vs Quant Small Cap Fund - Which is the best small cap mutual fund in 2025?"

This video compares two popular small cap mutual funds in India: Bandhan Small Cap Fund Direct Plan Growth and Quant Small Cap Fund Direct Plan Growth. Both funds focus on investing at least 65% in small cap stocks as mandated by SEBI but differ in their investment strategies, portfolio compositions, risk profiles, and performance metrics.

Key Financial Strategies & Investment Approaches

Bandhan Small Cap Fund

Fund Manager: Mr. Manish Gunwani (since Jan 2023)
Investment Style: Contrarian, fundamental-driven, long-term investing.
Strategy Highlights:
- Increase allocation during market corrections or panic phases.
- Focus on research-based stock picking, especially in microcap stocks where valuations are less discovered.
- Frequent portfolio rebalancing and adding stocks at attractive valuations.
- High conviction in holding quality small caps for the long term.
- Increased exposure in microcap companies during market corrections (Oct 2024 - Mar 2025).
- Portfolio is highly diversified with 183 stocks and lower concentration in top holdings (top 10 stocks ~3.14%).
Sector Allocation: Higher allocation in financial services and healthcare.
Market Segment Allocation: ~72% small cap, ~9% mid cap, ~6% large cap, ~13% cash.
Expense Ratio: 0.39%

Quant Small Cap Fund

Fund Managers: Team of seven including Mr. Sandeep Tandon (Founder & CIO), Mr. Ankit Pandey, and others.
Investment Style: Data-driven, dynamic, and timing-based.
Strategy Highlights:
- Uses VLRT model combining Valuation, Liquidity, Risk Appetite, and Timing analytics.
- Active management with sector and stock allocation adjusted based on market signals (MAC Micro signals).
- Entry into micro stocks only when data confirms market bottom.
- Regular portfolio health checks to exit stocks showing red flags.
- Focus on capital conservation with low risk alpha generation.
- Portfolio concentration is higher with 96 stocks and top 10 holdings ~10%.
- Larger exposure to large cap stocks (~22%) for stability.
Sector Allocation: Also focused on financial services and healthcare.
Market Segment Allocation: ~67% small cap, ~1% mid cap, ~23% large cap, ~10% cash.
Expense Ratio: 0.66%

Performance Comparison

Metric Bandhan Small Cap Fund Quant Small Cap Fund 1-Year Returns 15.85% -2.44% 3-Year Returns 37.42% 33.18% 5-Year Returns 38.04% 46.02% 10-Year Returns N/A (launched 2020) 20.64% Standard Deviation (Volatility) 18.21% (higher) 17.99% (slightly lower) Sharpe Ratio (Risk-adjusted returns) 1.37 (better) 1.16 Beta (Market volatility) 0.9 (less volatile) 0.87 (less volatile) Sortino Ratio (Downside risk) 2.14 (better) 1.76 Upside Capture Ratio 98 (slightly less than benchmark) 78 (lower, less participation in upside) Downside Capture Ratio 84 (better downside protection) 57 (even better downside protection)

Key Insights & Recommendations

Bandhan Small Cap Fund is better suited for investors seeking long-term, valuation-based, fundamental investing with a diversified portfolio and higher risk-adjusted returns during volatile markets.
Quant Small Cap Fund suits investors who prefer a data-driven, dynamic approach with active timing and risk management, offering better downside protection and stability due to higher large cap exposure.
Bandhan has a lower expense ratio (0.39%) compared to Quant (0.66%).
Portfolio overlap between the two funds is low (~13%), so investors can consider holding both funds for diversification.
Investors should consider not only returns but also risk metrics and expense ratios before investing.
The video emphasizes the importance of continuing SIPs during market corrections rather than stopping them out of fear.