All returns displayed below are CAGR.
EquitySmall Cap46.60
-2.50%
EquitySmall Cap28.26
-2.40%
EquitySmall Cap256.39
-7.50%
EquitySmall Cap41.33
-1.50%
EquitySmall Cap141.24
+0.70%
EquitySmall Cap168.42
-6.20%
EquitySmall Cap167.69
-8.50%
EquitySmall Cap39.88
-7.90%
EquitySmall Cap259.99
-3.00%
EquitySmall Cap43.53
-4.80%
EquitySmall Cap194.64
-3.80%
EquitySmall Cap80.15
-9.10%
EquitySmall Cap46.28
-6.90%
EquitySmall Cap105.54
-2.70%
EquitySmall Cap30.80
-8.30%
| Fund names | NAV(₹) | VR Rating | 1Y Returns | 3Y Returns | 5Y Returns |
|---|---|---|---|---|---|
| Bandhan Small Cap Fund-Reg(G) Equity Small Cap | 46.60 | 3 | -2.50% | +29.60% | +29.90% |
| ITI Small Cap Fund-Reg(G) Equity Small Cap | 28.26 | 2 | -2.40% | +26.30% | +24.20% |
| Quant Small Cap Fund(G) Equity Small Cap | 256.39 | 4 | -7.50% | +25.10% | +33.60% |
| Invesco India Smallcap Fund-Reg(G) Equity Small Cap | 41.33 | 3 | -1.50% | +24.60% | +29.30% |
| HDFC Small Cap Fund-Reg(G) Equity Small Cap | 141.24 | 2 | +0.70% | +23.20% | +29.70% |
| Nippon India Small Cap Fund(G) Equity Small Cap | 168.42 | 5 | -6.20% | +23.20% | +31.80% |
| Franklin India Small Cap Fund(G) Equity Small Cap | 167.69 | 4 | -8.50% | +21.90% | +28.40% |
| Tata Small Cap Fund-Reg(G) Equity Small Cap | 39.88 | 4 | -7.90% | +20.70% | +29.10% |
| Sundaram Small Cap Fund(G) Equity Small Cap | 259.99 | 2 | -3.00% | +20.60% | +27.20% |
| Edelweiss Small Cap Fund-Reg(G) Equity Small Cap | 43.53 | 3 | -4.80% | +20.30% | +28.20% |
| DSP Small Cap Fund-Reg(G) Equity Small Cap | 194.64 | 2 | -3.80% | +20.10% | +26.10% |
| HSBC Small Cap Fund-Reg(G) Equity Small Cap | 80.15 | 3 | -9.10% | +19.90% | +29.10% |
| Bank of India Small Cap Fund-Reg(G) Equity Small Cap | 46.28 | 4 | -6.90% | +19.70% | +27.50% |
| Axis Small Cap Fund-Reg(G) Equity Small Cap | 105.54 | 4 | -2.70% | +18.90% | +25.90% |
| LIC MF Small Cap Fund(G) Equity Small Cap | 30.80 | 2 | -8.30% | +18.70% | +27.50% |
Small-cap Mutual Funds offer the opportunity to invest in emerging Indian businesses with the potential for superior long-term returns, albeit at the cost of sharp short-term volatility. By investing with discipline, maintaining patience, and regularly reviewing your portfolio, you can utilise the power of India’s growth economy while balancing risk exposure.
Small-cap Mutual Funds are diversified equity mutual fund schemes that primarily invest in shares of Small-cap companies, businesses positioned below the 250th rank in terms of market capitalisation as per the BSE or NSE ranking methodology. The Securities and Exchange Board of India (SEBI) mandates that at least 65% of a Small-cap Mutual Fund’s assets are allocated to Small-cap Equities.
These companies typically have a market capitalisation lower than large and mid-cap peers and are often young, dynamic businesses striving for rapid growth. Owing to their stage in the business cycle, Small-cap Equity Funds carry higher risk yet offer wealth creation opportunities for astute, long-term investors.
Small-cap companies have the scope to scale operations faster, resulting in potentially higher long-term wealth creation than their large-cap counterparts.
Investors gain exposure to companies that, if successful, could become tomorrow’s market leaders.
Adding Small-cap Equity Funds broadens sector and business exposure.
Less media and institutional focus may allow professional fund managers to discover undervalued investment opportunities.
With prudent selection, these funds can deliver returns that outpace inflation over the long term.
Small-cap Mutual Funds pool capital from multiple investors and invest predominantly in small-cap stocks listed on the BSE or NSE. Fund managers conduct thorough research and select companies with high growth potential, sound management, and innovative business models.
These funds track benchmarks like the NIFTY Smallcap 250 Total Return Index or the BSE 250 Smallcap TRI.
Key operational features:
At least 65% in Small-cap Equities, per SEBI regulations. The remainder may be deployed in mid-cap, large-cap, or cash instruments for risk management.
Owing to their illiquid and less-researched nature, the fund manager’s expertise plays a pivotal role in stock selection and risk control.
NAVs may fluctuate sharply in the short term. Small-cap stocks are far more sensitive to market trends and news events.
While mutual funds allow buying and selling on any business day, individual small-cap stocks may be less liquid in the underlying market. Fund managers carefully manage this risk.
Small-cap Equity Funds can be a valuable addition to an equity portfolio, especially for those with a high risk tolerance and a long-term investment view. Their return profile may exceed that of large- and mid-cap funds over extended periods.
However, investors must be comfortable with:
On balance, for investors who can withstand volatility and avoid emotional decision-making, Small-cap Mutual Funds can help achieve ambitious financial goals.
Small-cap Equity Funds are suitable for:
Step-by-step guide
Ensure your identity is verified through PAN, Aadhaar, and address proof.
Invest directly via mutual fund houses, online investment platforms, or through registered distributors, ensure they’re SEBI-compliant and support BSE/NSE transactions.
Decide between a Systematic Investment Plan (SIP) for regular, disciplined investing, or a lumpsum amount for immediate market participation. An SIP is generally preferred to average out timing risk.
Compare funds based on long-term performance, experience of fund management, expense ratio, and portfolio quality.
Regularly reviewing your investment annual check-ins is advisable. Adjust allocation if risk profile or investment objectives change.
Understand applicable taxes and exit loads to avoid surprises at redemption time.
| Parameter | Typical range (2025) |
| Minimum SIP amount | ₹100–₹1,000 |
| Minimum lumpsum | ₹1,000–₹5,000 |
| Exit load | Up to 1% (if withdrawn within 1 year) |
| Suggested holding period | 5–7 years or more |
| Portfolio turnover | Moderate to high |
| Benchmark index | NIFTY Smallcap 250 TRI, BSE 250 Smallcap TRI |
Always maintain investment proofs and consult with a tax advisor for the latest rules.
No, Small-cap Mutual Funds are not risk-free. They are among the most volatile equity fund categories and can experience significant short-term losses, although they offer higher long-term return potential compared to large-cap and mid-cap funds.
The best Small-cap Mutual Fund can vary based on investor profile, risk tolerance, and market conditions. Therefore, ensure that you conduct thorough research before investing.
It can be good for those with a high risk appetite, a long-term horizon, and a diversified portfolio. Small-cap Funds should not make up your entire investment corpus. Consult a qualified financial adviser to assess suitability.
Yes, capital gains from Small-cap Mutual Funds are taxable based on the holding period. Long-term gains attract 12.5% tax (post-₹1.25 lakh exemption), while short-term gains are taxed at 20%.
Yes, Small-cap Mutual Funds are open-ended and can generally be redeemed on any business day. However, an exit load (commonly up to 1%) may apply if units are redeemed within 1 year of investment.
Small-cap Mutual Funds are not suitable for short-term goals. Their volatility means that only a long-term holding period can balance out market fluctuations and harness the real growth potential.
