Small-cap mutual funds can offer meaningful long-term growth by investing in emerging companies beyond India’s top 250 listed firms. However, this category also carries very high risk and can be more volatile than large-cap or mid-cap funds. For investors with a longer time horizon and the ability to tolerate market swings, reviewing 5-year CAGR, AUM, expense ratio, portfolio exposure, and risk metrics can help identify funds that have delivered relatively consistent performance over time.
| Mutual Fund | 5Y CAGR | AUM (₹ Cr.) | Expense Ratio |
| Invesco India Smallcap Fund | 19.97% | 13,384.88 | 0.67% |
| Bandhan Small Cap Fund | 19.95% | 28,466.18 | 0.63% |
| Bank of India Small Cap Fund | 19.70% | 2,572.40 | 0.70% |
| Nippon India Small Cap Fund | 19.24% | 74,484.50 | 0.73% |
| Quant Small Cap Fund | 18.72% | 32,739.05 | 0.81% |
| LIC MF Small Cap Fund | 18.13% | 743.33 | 1.44% |
| Edelweiss Small Cap Fund | 18.00% | 6,579.72 | 0.62% |
| HSBC Small Cap Fund | 17.52% | 16,876.72 | 0.76% |
| DSP Small Cap Fund | 17.50% | 19,634.90 | 0.82% |
| ITI Small Cap Fund | 17.26% | 3,321.83 | 0.84% |
Invesco India Smallcap Fund has delivered an annualised return of 23.9% since inception. Around 58.88% of its portfolio is invested in small-cap stocks, with the highest sector exposure to Labs & Life Sciences Services (12.22%). The fund is classified as having a "Very High" risk under SEBI's riskometer and has a standard deviation of 16.98%, slightly above the category average of 16.34%. It is suited for investors seeking long-term exposure to the small-cap segment.
Bandhan Small Cap Fund has generated an annualised return of 30.71% since inception. It invests 72.42% of its portfolio in small-cap companies, while the Miscellaneous sector has the highest allocation at 8.27%. The fund carries a "Very High" risk rating and has a standard deviation of 16.06%, which is marginally lower than the category average. It offers broad exposure to small-cap stocks for long-term investors comfortable with higher market volatility.
Bank of India Small Cap Fund has delivered an annualised return of 27.08% since inception. Nearly 77.47% of its assets are invested in small-cap companies, with the highest allocation to Electrical Components & Equipments at 12.68%. The fund is classified as "Very High" risk and has a standard deviation of 16.86%. It is designed for investors seeking long-term capital appreciation through a diversified portfolio of small-cap businesses.
Nippon India Small Cap Fund manages the largest assets among the funds listed, with an AUM of ₹74,484.50 crore. It has delivered an annualised return of 23.89% since inception and allocates 68.59% of its portfolio to small-cap stocks. Auto Parts is its largest sector exposure at 7.5%. The fund is rated "Very High" risk but has a relatively lower standard deviation of 15.27%, reflecting comparatively lower volatility within its category.
Quant Small Cap Fund has delivered an annualised return of 17.64% since inception. About 53.87% of its portfolio is invested in small-cap companies, while the Others category accounts for the highest sector allocation at 12.71%. The fund falls under the "Very High" risk category and has a standard deviation of 15.67%. It offers exposure to small-cap equities through a diversified investment approach aimed at long-term wealth creation.
LIC MF Small Cap Fund has generated an annualised return of 15.64% since inception. It has the highest small-cap allocation among the listed funds at 88.58% and also carries the highest expense ratio of 1.44%. Electrical Components & Equipments is its largest sector exposure at 11.87%. The fund is classified as "Very High" risk and has a standard deviation of 17.63%, indicating relatively higher volatility.
Edelweiss Small Cap Fund has delivered an annualised return of 24.83% since inception. Around 66.35% of its assets are invested in small-cap stocks, with Auto Parts accounting for the highest sector allocation at 9.04%. It has the lowest expense ratio among the listed funds at 0.62%. The fund carries a "Very High" risk rating and has a standard deviation of 15.75%, making it suitable for long-term investors with a high risk appetite.
HSBC Small Cap Fund has generated an annualised return of 20.34% since inception. It invests 69.04% of its portfolio in small-cap companies, while Pharmaceuticals is its largest sector exposure at 8.91%. The fund is categorised as "Very High" risk and has a standard deviation of 17.55%. It aims to provide long-term capital appreciation by investing predominantly in smaller companies with growth potential.
DSP Small Cap Fund has delivered an annualised return of 21.38% since inception. The fund allocates 79.42% of its assets to small-cap stocks, with Auto Parts emerging as the largest sector exposure at 13.01%. It carries a "Very High" risk rating and has a standard deviation of 16.15%. The fund focuses on long-term wealth creation through investments in a diversified portfolio of small-cap companies.
ITI Small Cap Fund has delivered an annualised return of 22.18% since inception. Around 59.36% of its portfolio is invested in small-cap companies, with Pharmaceuticals accounting for the highest sector allocation at 12.76%. The fund is classified as "Very High" risk and has a standard deviation of 17.28%. It is designed for investors seeking long-term growth through exposure to emerging small-cap businesses.
The small-cap funds listed above have shown strong 5-year CAGR performance, but past returns should not be the only basis for investment decisions. Since small-cap schemes are highly sensitive to market cycles, investors should assess their risk appetite, investment horizon, expense ratio, fund size, and portfolio strategy before investing.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Published on: Jul 31, 2026, 12:19 PM IST
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