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Best Small Cap Mutual Funds

Companies that are ranked after 250 in terms of their market capitalisation are termed as small cap companies. These small cap companies have a market cap which is less than Rs 500 crores and are publicly traded. Mutual fund schemes that invest in these companies are termed as small cap mutual fund. The small cap companies are comparatively newer and have a significantly higher risk when compared with large cap or mid cap companies.

Small cap funds are extremely sensitive to market movements and may yield huge returns during a positive market movement. However, this means that during a negative market sentiment, these funds will lose substantial value.

The small cap mutual funds are extremely risky, and it is imperative for you to be cautious before making an investment in small cap mutual funds. While some of the best performing small cap mutual funds may yield good returns, others may not do equally well.

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Top 10 Small Cap Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Axis Small Cap FundEquityVery High73.9%5star7,095
Kotak Small Cap FundEquityVery High96.4%4star5,642
Nippon India Small Cap FundEquityVery High88.0%4star16,633
SBI Small Cap FundEquityVery High64.6%4star9,714
Edelweiss Small Cap FundEquityVery High81.4%4star1,006
Canara Robeco Small Cap FundEquityVery High84.4%4star1,480
ICICI Prudential Small Cap FundEquityVery High85.4%3star2,961
Union Small Cap FundEquityVery High71.9%3star553
DSP Small Cap FundEquityVery High70.7%3star8,000
IDBI Small Cap FundEquityVery High76.1%3star128
HDFC Small Cap FundEquityVery High88.2%3star12,913
L&T Emerging Businesses FundEquityVery High89.2%3star7,248
Principal Small Cap FundEquityModerately High86.2%3star445
Tata Small Cap FundEquityVery High85.8%3star1,533
Invesco India Smallcap FundEquityVery High77.8%3star1,194
View All Top 10 Small Cap Mutual Funds

Features of Small Cap Mutual Fund

Small Cap mutual funds empower investors to earn profits from growing companies. While institutional investors are heavily invested in the more stable funds, individual investors can pick some of the best small cap growth funds, small cap value funds, and small cap index funds to earn high returns.

Small cap mutual funds are ideal for aggressive investors who seek higher returns and are comfortable with high risk. It is worth noting that small cap companies end up getting a lot of negative media attention due to the failure of a few companies. So, small cap mutual funds provide an opportunity to invest in such companies while ensuring that your capital is invested in the right companies.

Taxability

Small cap mutual funds invest in equity and equity-related instrument of companies with market capitalisation less than 500 crores. If you hold your small cap mutual funds for a period of over 12 months, you will be liable to pay long-term capital gain tax which is 10 per cent of your gains. However, this is applicable only if the returns are more than Rs 1 lakh.

On the other hand, if you sell you small cap mutual funds before 12 months from the date of purchase, a short-term capital gain tax of 15 per cent will be levied on your returns. So, selling you funds before a year will warrant a higher tax against holding the funds for over a year. It is highly recommended that you do not sell your investment on short-term market movements. You will not only pay more taxes, but you will also miss the opportunity to earn higher revenues.

Who Are These Funds Suited For?

The size of the company heavily influences the returns it can generate over a period of time. Companies with different market capitalisations come with a different set of opportunities. Small Cap companies come with high risk and high reward possibility. You will have to take huge risks by investing in relatively smaller companies who are yet to prove their business on a large scale.

As a reward, if the company does well and succeeds, you will earn returns far better than any other investment instrument. Small cap mutual funds are suitable for investors with high-risk appetite and a long-term investment horizon. If you open to comparatively higher risks, you should invest a portion of your portfolio in some of the best small cap mutual funds. It is essential to ensure that only a part of your entire portfolio is in small cap funds.

Major Advantages

Small cap companies present an opportunity to yield higher returns compared to other instruments. While the volatility is comparatively higher, small cap companies are ideal for investors seeking long-term wealth creation. By investing in some of the best small cap funds in India, you can avoid companies with bad financials as the mutual fund houses carry out extensive research before investing.

Not all mutual fund companies invest in small cap companies giving rise to a huge opportunity for those who do. Best small cap mutual funds in India invest in such companies with high growth potential. The growth potential for small cap companies cannot be compared with that of large cap or mid cap companies. Since these companies have a market cap that is less than Rs 500 crores, a few positive news can take it to the new highs. This is a huge opportunity for you to earn huge returns by investing in small cap mutual funds.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

Axis Small Cap Fund Direct Growth

Fund Performance: This fund has given 30.45% annualized returns in the last three years. In the last year, its returns were 73.9%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 73.9% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM7,095Cr
1Y Returns73.9%

Kotak Small Cap Fund Direct Growth

Fund Performance: This fund has given 30.65% annualized returns in the last three years. In the last year, its returns were 96.44%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 96.44% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM5,642Cr
1Y Returns96.4%

Nippon India Small Cap Fund Direct Growth

Fund Performance: This fund has given 24.08% annualized returns in the last three years. In the last year, its returns were 87.96%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 87.96% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹5,000
AUM16,633Cr
1Y Returns88.0%

SBI Small Cap Fund Direct Growth

Fund Performance: This fund has given 23.03% annualized returns in the last three years. In the last year, its returns were 64.6%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 64.6% returns in the last one year. . Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM9,714Cr
1Y Returns64.6%

Edelweiss Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 81.37%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 81.37% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM1,006Cr
1Y Returns81.4%

Canara Robeco Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 84.43%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 84.43% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹1,000.

Min Investment Amt₹5,000
AUM1,480Cr
1Y Returns84.4%

ICICI Prudential Smallcap Fund Direct Plan Growth

Fund Performance: This fund has given 26.19% annualized returns in the last three years. In the last year, its returns were 85.37%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 85.37% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹5,000
AUM2,961Cr
1Y Returns85.4%

Union Small Cap Fund Direct Growth

Fund Performance: This fund has given 24.16% annualized returns in the last three years. In the last year, its returns were 71.93%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 71.93% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹1,000. Minimum SIP investment amount required for this scheme is ₹2,000.

Min Investment Amt₹1,000
AUM553Cr
1Y Returns71.9%

DSP Small Cap Direct Plan Growth

Fund Performance: This fund has given 22.06% annualized returns in the last three years. In the last year, its returns were 70.73%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 70.73% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM8,000Cr
1Y Returns70.7%

IDBI Small Cap Fund Direct Growth

Fund Performance: This fund has given 18.62% annualized returns in the last three years. In the last year, its returns were 76.06%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 76.06% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM128Cr
1Y Returns76.1%

HDFC Small Cap Fund Direct Growth

Fund Performance: This fund has given 18.5% annualized returns in the last three years. In the last year, its returns were 88.15%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 88.15% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM12,913Cr
1Y Returns88.2%

L&T Emerging Businesses Fund Direct Growth

Fund Performance: This fund has given 18.05% annualized returns in the last three years. In the last year, its returns were 89.16%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 89.16% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM7,248Cr
1Y Returns89.2%

Principal Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 86.22%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 86.22% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM445Cr
1Y Returns86.2%

Tata Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 85.85%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 85.85% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹5,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM1,533Cr
1Y Returns85.8%

Invesco India Smallcap Fund Direct Growth

Fund Performance: In the last year, its returns were 77.76%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 77.76% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹1,000. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹1,000
AUM1,194Cr
1Y Returns77.8%

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