In this article, we discuss some of the best performing small cap funds. Small Cap Funds have generated a lot of wealth in long term. Small-cap funds, as the name suggests, invest in small-cap companies. Because small cap companies are yet to grow big – investors can ride on their growth path.

Small Cap Funds are Best for Long-term

First things first, Small-cap funds invest in small cap companies – and hence are very risky. That means you can lose a significant part of your capital if the market falls down. Check out how DSP Micro Cap Fund, and in general Small Cap index fell during the 2008 crash.


small cap performance in 2008 crash

That is fall of more than 60% in a year.

But had you not sold your investments after the crash, this is what you would have seen.

small cap performance after 2008

That is a rise of more than 550% – you would have gained in your investments manifold!

So before moving ahead: Invest in small-cap if and only if you are okay with short-term volatility and only if you are investing for a long term. Long-term is usually more than 5 years.

Now let us look at the best performing small cap funds.

Top 5 Small-Cap Mutual Funds

Kotak Emerging Equity Scheme

This is a 5 star rated fund on Groww and is a little more than 10 years old. It returned 35.38% in the last 1 year and 25.28% in the last 5 years.

kotak emerging equity scheme

SBI Small & Midcap Fund

This fund is a very popular small cap fund by SBI. It is also a 5 star rated fund on Groww. In the last 1 year, it gave a return of 35.38% and in the last 5 years, 25.28%.

sbi small & midcap fund

Reliance Small Cap Fund

Reliance Small Cap Fund is also rated 5 stars on Groww and is one of the best performing small cap funds. In the last 1 year, it returned a whopping 53.21% and in the last 5 years, it gave 32.99%.

reliance small cap fund

L&T Emerging Businesses Fund

This fund is relatively new as it is less than 5 years old. On Groww, it is a 5 star rated fund and in the last 1 year, its returns stood at an incredible 56.17%.

Canara Robeco Emerging Equities Fund

Canara Robeco Emerging Equities Fund has given a return of 44.48% in the last 1 year and 28.83% in the last 5 years.

Investing in small-cap funds is only for those who are in it for the long-term (more than 5 years) and those who can stomach volatility in the short term.

Happy investing!