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5 Smallcap Funds Offer Over 30% SIP Returns in 3 Years

29 May 20246 mins read by Angel One
Five smallcap funds offer over 30% SIP returns in 3 years. Investors should consider volatility, fund manager expertise, and their risk tolerance before investing. Read on to know more.
5 Smallcap Funds Offer Over 30% SIP Returns in 3 Years
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Investing in small-cap funds can be a lucrative strategy for investors seeking high returns. Small cap funds invest in smaller companies with the potential for significant growth, and they often outperform larger, more established companies in a bullish market.

The table below lists the 5 best small cap mutual funds that have delivered impressive returns over the past three years, offering more than 30% SIP returns.

Best Smallcap Funds With 3 Year GAGR

Name AUM (₹ Crores) CAGR 3Y (%) Expense Ratio (%) Exit Load (%) Minimum Investment (₹)
Nippon India Small Cap Fund 50,422.783 34.94 0.68 1 100
HDFC Small Cap Fund 29,685.319 30.19 0.58 1 5000
Quant Small Cap Fund 20,164.094 35.23 0.64 1 1000
HSBC Small Cap Fund 14,619.417 32.68 0.70 1 500
Franklin India Smaller Cos Fund 12,586.939 32.69 0.92 1 5000

Note: The above list of small-cap funds is dated May 16, 2024. These funds are sorted from highest to lowest based on the AUM. The above funds were selected with a 3-year CAGR of above 30%.

Detailed Analysis of Best Small Cap Mutual Funds

1. Nippon India Small Cap Fund

Nippon India Small Cap Fund has been one of the top performers in the smallcap category, boasting a remarkable CAGR of 34.94% over the past three years. The fund’s strategy involves investing in high-growth potential smallcap companies, which has significantly contributed to its stellar returns. With an expense ratio of 0.68%, it offers a cost-effective investment option. The fund has a minimal SIP amount requirement of ₹100, making it accessible to a broad range of investors.

2. HDFC Small Cap Fund

HDFC Small Cap Fund has delivered a solid 30.19% CAGR over the last three years. Known for its robust portfolio management and consistent performance, this fund is a favourite among investors seeking stability and growth in the smallcap space. With an expense ratio of 0.58%, it is one of the more cost-efficient options. However, the higher minimum SIP amount of ₹5000 might be a consideration for some investors.

3. Quant Small Cap Fund

Quant Small Cap Fund has an impressive 35.23% CAGR over three years. This fund focuses on identifying undervalued smallcap stocks with high growth potential, leading to substantial returns. The expense ratio is relatively moderate at 0.64%. With a minimum SIP of ₹1000, it strikes a balance between accessibility and commitment, appealing to both new and seasoned investors.

4. HSBC Small Cap Fund

HSBC Small Cap Fund has achieved a noteworthy CAGR of 32.68% in the past three years. The fund’s investment philosophy focuses on companies with strong fundamentals and growth potential. With an expense ratio of 0.70%, it remains competitively priced. The minimum SIP amount of ₹500 makes it accessible to a larger set of investors looking to enter the smallcap segment.

5. Franklin India Smaller Companies Fund

Franklin India Smaller Companies Fund has delivered a robust 32.69% CAGR over three years. Despite having a higher expense ratio of 0.92%, the fund’s performance justifies the cost. It has no minimum SIP requirement, making it highly flexible for investors who prefer to invest varying amounts periodically. This fund is ideal for those who prioritise high returns and are willing to manage higher expense ratios.

Factors To Consider Before Investing in Small Cap Funds

Investing in small cap mutual funds can be an attractive option for those seeking potentially high returns, but it also comes with increased risk. Here are some key factors to consider before investing in small cap funds:

  1. Volatility: Small cap stocks are more volatile than their larger counterparts. This means that their prices can fluctuate significantly in short periods, leading to potential for both high gains and losses.
  2. Market Cycles: Small caps often perform differently across market cycles. They might outperform during economic recoveries but underperform in downturns. Understanding where the market is in its cycle can help in timing investments.
  3. Fund Manager Expertise: The success of small cap funds often hinges on the expertise of the fund manager. Look for managers with a strong track record in this segment and a deep understanding of the companies they invest in.
  4. Diversification: While small cap funds can offer significant growth potential, they should be part of a diversified portfolio. This helps mitigate risk as small cap stocks can be affected by sector-specific downturns or company-specific issues.
  5. Investment Horizon: Small cap funds generally require a longer investment horizon to ride out the inherent volatility. Investors should be prepared to hold these investments for several years to realize their full potential.
  6. Liquidity: Small cap stocks can be less liquid than larger stocks, which can affect the ability to quickly buy or sell without impacting the price significantly.
  7. Risk Tolerance: Given their volatility, small cap funds are best suited for investors with a higher risk tolerance. Assessing one’s comfort with risk is crucial before investing in these funds.

Who Should Invest in Small Cap Funds?

Small cap funds are ideal for risk-tolerant, long-term investors seeking capital appreciation and willing to endure market volatility. These funds suit those with a diversified portfolio looking to enhance potential returns through investments in younger, less established companies.

Typically, investors with a deep understanding of market cycles or high net worth individuals who can absorb potential losses may find small cap funds appealing. Before investing, it’s crucial to evaluate one’s risk tolerance, investment goals, and time horizon to ensure compatibility with the unique characteristics and risks of small cap funds


These five smallcap funds have proven their mettle by delivering over 30% SIP returns in the past three years. While the high returns are attractive, investors should also consider other factors such as expense ratios, minimum investment requirements, and exit loads. It’s crucial to align investments with individual financial goals and risk tolerance.

As always, thorough research and, if needed, consultation with a financial advisor are recommended before making any investment decisions. Ready to invest in small cap funds? Open your Demat account with Angel One today!

Ready to watch your savings grow? Try our SIP Plan Calculator today and unlock the potential of disciplined investing. Perfect for planning your financial future. Start now!

Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.

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