Top 3 Small Cap SWP Mutual Funds That Delivered Rs 1 Lakh Monthly Income for 10 Years

Investors often use the Systematic Withdrawal Plan (SWP) in mutual funds to ensure a steady monthly income. SWPs are particularly popular among senior citizens seeking a regular income stream post-retirement. While SWPs can be set up in equity, hybrid, or debt mutual funds based on individual risk appetite and financial goals, small-cap funds have demonstrated impressive long-term returns, making them a compelling choice for those willing to embrace higher risk.

In this blog, we explore the top three small-cap SWP mutual funds that have consistently provided at least Rs 1 lakh monthly income for 10 years on a Rs 65 lakh investment. Notably, the number one fund on this list still boasts a balance of Rs 1.19 crore even after a decade of withdrawals.

How Does SWP Work?

• Lump Sum Investment: Start with a one-time investment in a mutual fund scheme.
• Regular Withdrawals: Decide on the amount you wish to withdraw monthly.
• Sale of NAVs: The fund house sells the necessary units at the current Net Asset Value (NAV) to provide the specified monthly income.

Managing Depletion: The Key to Sustaining SWP Income

The primary concern with SWPs is the potential depletion of your investment over time. However, by strategically withdrawing less than your investment’s growth rate, you can maintain—and even grow—your overall balance. Below, we highlight three standout small-cap funds that have excelled at providing stable withdrawals while preserving significant capital.

1. SBI Small Cap Fund – Regular Plan – Growth

Performance Overview

• Annualised Returns (CAGR): 23.42% over 10 years
• Assets Under Management (AUM): Rs 32,761.17 crore
• Net Asset Value (NAV): Rs 182.3351

Fund Highlights
Since its inception in September 2009, the SBI Small Cap Fund has delivered impressive returns, outperforming its benchmark, the BSE 250 SmallCap Index, which has provided 21.39% annualised returns. With a Rs 65 lakh investment, the fund has facilitated Rs 1 lakh monthly income for 10 years, totaling 120 installments. Remarkably, after these withdrawals, the fund balance still stands at Rs 1.19 crore.

2. Nippon India Small Cap Fund – Regular Plan – Growth Option

Performance Overview

• Annualised Returns (CAGR): 19.84% over 10 years
• Assets Under Management (AUM): Rs 60,372.55 crore
• Net Asset Value (NAV): Rs 178.54

Fund Highlights
Launched in September 2010 and benchmarked against the NIFTY Smallcap 250 TRI, the Nippon India Small Cap Fund has delivered consistent performance with a 22.93% CAGR since inception. A Rs 65 lakh investment has yielded Rs 1 lakh monthly income for 10 years, with 120 installments withdrawn. After a decade of income, the fund still retains a balance of Rs 55.95 lakh.

3. DSP Small Cap Fund – Regular – Growth

Performance Overview

• Annualised Returns (CAGR): 19.24% over 10 years
• Assets Under Management (AUM): Rs 16,084.62 crore
• Net Asset Value (NAV): Rs 201.545

Fund Highlights
With a strong track record since its launch in June 2007, the DSP Small Cap Fund has generated 19.06% annualised returns, closely tracking its benchmark, the BSE 250 SmallCap Index. Investors who placed Rs 65 lakh in this fund have enjoyed Rs 1 lakh monthly income over the past decade, and the fund’s current balance remains at Rs 47.44 lakh after 120 withdrawals.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.