Investors Who Bet on SMEs Win Big Over Last 10 Years
Small and medium-sized enterprises (SMEs) have been a major driver of economic growth in India over the past decade. As a result, investors who have bet on SMEs have seen big returns.
Here is a comparison of the last 10 years index performance of S&P BSE SME IPO Index and Nifty 50:
| Year | S&P BSE SME IPO index | Nifty50 |
|---|---|---|
| 2013-14 | 253.22% | 17.98% |
| 2014-15 | 0.85% | 26.65% |
| 2015-16 | 2.60% | -8.86% |
| 2016-17 | 67.85% | 18.55% |
| 2017-18 | 43.86% | 10.25% |
| 2018-19 | -5.20% | 14.93% |
| 2019-20 | -22.38% | -26.03% |
| 2020-21 | 19.24% | 70.87% |
| 2021-22 | 740.58% | 18.88% |
| 2022-23 | 76.30% | -0.60% |
| Avg. Return | 60.69% | 11.81% |
The S&P BSE SME IPO Index, which tracks the performance of SMEs that have listed on the BSE SME platform, has outperformed the Nifty 50 index over the last 10 years. The S&P BSE SME IPO Index has grown at an average annual rate of 60.69%, while the Nifty 50 has grown at an average annual rate of 11.81%.
There are a number of reasons why investors have been rewarded for betting on SMEs. First, SMEs are more likely to grow rapidly than large companies. This is because they are newer and have less competition. Second, SMEs are more likely to be innovative. This is because they are smaller and have more freedom to experiment. Third, SMEs are more likely to be profitable. This is because they are not burdened by the same overhead costs as large companies.
Of course, there are also risks associated with investing in SMEs. SMEs are more likely to fail than large companies. This is because they are newer and have less experience. Second, SMEs are more likely to be affected by economic downturns. This is because they have less financial resources to weather a storm.
Despite the risks, investors who are willing to take on a bit of extra risk can be rewarded handsomely for betting on SMEs. Over the long term, SMEs have been a major driver of economic growth in India, and they are likely to continue to be a major driver of growth in the years to come.
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