The small-cap mutual fund space has expanded with the entry of Abakkus and Helios. Both funds manage roughly ₹1,000 crore but use different investment strategies. Investors now have a choice between a concentrated, cash-conservative approach and a broader, fully invested portfolio.
Two New Small-Cap Options Emerge
The Indian mutual fund market recently saw the launch of two small-cap schemes: the Abakkus Small Cap Fund and the Helios Small Cap Fund. Both funds have reached approximately ₹1,000 crore in assets under management (AUM) within their first year of operation. While both aim to tap into the small-cap segment, they differ significantly in their portfolio construction and risk management styles, presenting investors with distinct ways to access this market.
Contrasting Portfolio Strategies
The fundamental difference between the two funds lies in how they manage stock selection and cash reserves. Abakkus, which started in March 2026, focuses on a concentrated portfolio. It holds 62 stocks and maintains a cash reserve of about 14%. The fund also holds a minor portion of its assets in large-cap stocks.
In contrast, the Helios Small Cap Fund, which launched in November 2025, follows a more diversified strategy. It maintains a larger portfolio of 82 stocks and remains almost fully invested in the market at all times. Helios does not hold large-cap stocks in this scheme, focusing purely on the small-cap segment.
Different Sectoral Bets
The two funds also take different paths when choosing which industries to bet on. Abakkus has leaned toward financials, healthcare, and industrial companies. Helios has directed its focus toward manufacturing, defence, and electronics sectors.
This difference extends to the specific stocks held by each fund. Data suggests that the top 10 holdings of the two funds do not overlap, meaning investors seeking exposure to different parts of the small-cap market may find their portfolio approaches to be complementary rather than identical.
The Risk of New Funds
While these funds offer fresh strategies, investors must consider the risks associated with new schemes. Unlike established funds that have operated for years across different market cycles, these funds have limited historical performance data. Small-cap investing is inherently volatile, and these schemes are still building their track records.
Additionally, while holding cash—as Abakkus does—can protect against sharp market drops, it can also limit potential gains during a strong bull market when competitors are fully invested. Conversely, remaining fully invested, as Helios does, provides full participation in market moves but leaves the fund more exposed to sudden market corrections.
What Investors Should Monitor
For those considering these schemes, the decision involves more than just selecting a fund house. It requires an assessment of which investment style—concentrated with a cash buffer or highly diversified and fully invested—aligns with one's risk tolerance. The key monitorables for investors will be how each fund performs as it matures, the consistency of the fund managers in following their stated strategies, and how the portfolios react to market volatility over the next few years.