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)
SBI Small Cap FundEquityModerately High14.5%5star3,156
Nippon India Small Cap FundEquityModerately High6.7%4star8,525
Edelweiss Small Cap FundEquityN.A4star448
Canara Robeco Small Cap FundEquityModerately HighN.A4star345
HDFC Small Cap FundEquityModerately High-3.1%4star9,232
L&T Emerging Businesses FundEquityHigh0.6%4star5,941
Aditya Birla Sun Life Small Cap FundEquityModerately High-1.8%3star2,255
Franklin India Smaller Companies FundEquityModerately High0.3%3star6,929
Kotak Small Cap FundEquityModerately High14.9%3star1,360
Principal Small Cap FundEquityModerately HighN.A3star159
Motilal Oswal Nifty Smallcap 250 Index FundEquityModerately HighN.A3star20
BOI AXA Small Cap FundEquityModerately High12.0%3star49
DSP BlackRock Small Cap FundEquityModerately High10.3%3star4,918
Union Small Cap FundEquityModerately High12.0%2star327
ICICI Prudential Small Cap FundEquityModerately High18.5%2star799
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.

SBI Small Cap Fund Direct Growth

Fund Performance: This fund has given 16.46% annualized returns in the last three years. In the last year, its returns were 14.53%. 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 14.53% returns in the last one year. . Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM3,156Cr
1Y Returns14.5%

Nippon India Small Cap Fund Direct Growth

Fund Performance: This fund has given 11.55% annualized returns in the last three years. In the last year, its returns were 6.7%. 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 6.7% returns in the last one year. . Minimum SIP investment amount required for this scheme is ₹100.

Min Investment Amt₹5,000
AUM8,525Cr
1Y Returns6.7%

Edelweiss Small Cap Fund Direct Growth

Fund Performance: This fund has given NA annualized returns in the last three years. In the last year, its returns were NA. 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 NA 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
AUM448Cr
1Y ReturnsNA

Canara Robeco Small Cap Fund Direct Growth

Fund Performance: This fund has given NA annualized returns in the last three years. In the last year, its returns were NA. 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 NA 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
AUM345Cr
1Y ReturnsNA

HDFC Small Cap Fund Direct Growth

Fund Performance: This fund has given 12.16% annualized returns in the last three years. In the last year, its returns were -3.06%. 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 -3.06% 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
AUM9,232Cr
1Y Returns-3.1%

L&T Emerging Businesses Fund Direct Growth

Fund Performance: This fund has given 10.76% annualized returns in the last three years. In the last year, its returns were 0.57%. 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 0.57% 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
AUM5,941Cr
1Y Returns0.6%

Aditya Birla Sun Life Small Cap Fund Direct Growth

Fund Performance: This fund has given 4.17% annualized returns in the last three years. In the last year, its returns were -1.76%. 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 -1.76% 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 ₹1,000.

Min Investment Amt₹1,000
AUM2,255Cr
1Y Returns-1.8%

Franklin India Smaller Companies Direct Fund Growth

Fund Performance: This fund has given 5.5% annualized returns in the last three years. In the last year, its returns were 0.27%. 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 0.27% 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
AUM6,929Cr
1Y Returns0.3%

Kotak Small Cap Fund Direct Growth

Fund Performance: This fund has given 9.99% annualized returns in the last three years. In the last year, its returns were 14.92%. 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 14.92% 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
AUM1,360Cr
1Y Returns14.9%

Principal Small Cap Fund Direct Growth

Fund Performance: This fund has given NA annualized returns in the last three years. In the last year, its returns were NA. 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 NA 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
AUM159Cr
1Y ReturnsNA

Motilal Oswal Nifty Smallcap 250 Index Fund Direct Growth

Fund Performance: This fund has given NA annualized returns in the last three years. In the last year, its returns were NA. 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 NA 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
AUM20Cr
1Y ReturnsNA

BOI AXA Small Cap Fund Direct Growth

Fund Performance: This fund has given NA annualized returns in the last three years. In the last year, its returns were 11.97%. 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 11.97% 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
AUM49Cr
1Y Returns12.0%

DSP Small Cap Direct Plan Growth

Fund Performance: This fund has given 4.44% annualized returns in the last three years. In the last year, its returns were 10.31%. 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 10.31% returns in the last one year. . Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹1,000
AUM4,918Cr
1Y Returns10.3%

Union Small Cap Fund Direct Growth

Fund Performance: This fund has given 7.1% annualized returns in the last three years. In the last year, its returns were 12.01%. 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 12.01% 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 ₹2,000.

Min Investment Amt₹5,000
AUM327Cr
1Y Returns12.0%

ICICI Prudential Smallcap Fund Direct Plan Growth

Fund Performance: This fund has given 8.38% annualized returns in the last three years. In the last year, its returns were 18.53%. 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 18.53% 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
AUM799Cr
1Y Returns18.5%

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