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Best Small Cap Mutual Funds

Small cap mutual funds invest in small cap companies (the ones that have a market capitalization of less than Rs. 5,000 crores). They are the funds that predominantly invest in small cap stocks, with a very minute portion invested in higher market categories. However, they tend to outperform large or mid-cap funds but are known to be much more riskier in comparison.

To understand small cap mutual funds better, you can have a look at some of the best small cap mutual funds to invest in 2024.

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List of Small Cap Mutual Funds in India

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Bank of India Small Cap Fund
EquityVery High51.9%5₹910
Axis Small Cap Fund
EquityVery High44.7%5₹19,530
Nippon India Small Cap Fund
EquityVery High59.7%4₹45,894
HSBC Small Cap Fund
EquityVery High53.7%4₹13,980
Tata Small Cap Fund
EquityVery High46.6%4₹6,125
Edelweiss Small Cap Fund
EquityVery High51.3%4₹3,156
ICICI Prudential Smallcap Fund
EquityVery High48.1%4₹7,455
Kotak Small Cap Fund
EquityVery High39.3%4₹14,425
Quant Small Cap Fund
EquityVery High75.9%3₹15,663
IDBI Small Cap Fund
EquityVery High24.3%3₹160
Canara Robeco Small Cap Fund
EquityVery High43.6%3₹9,586
Franklin India Smaller Companies Direct Fund
EquityVery High58.7%3₹11,833
Invesco India Smallcap Fund
EquityVery High56.3%3₹3,658
UTI Small Cap Fund
EquityVery High41.7%3₹3,736
SBI Small Cap Fund
EquityVery High38.8%3₹24,861
View All

Who Should Invest in Small Cap Mutual Funds?

While searching for the best small cap mutual funds 2024, consider if you are-

  1. Investor Who Wants to Diversify

It is suitable for investors who are already in the investing market and looking for more ways to diversify their investments. Given that small cap funds can be risky in nature, it ensures that your investments are spread across various other forms of investments and not small cap funds alone.

  1. High-Risk Appetite Investor/Aggressive Investor

These investments are much more riskier than mid or large-cap funds, given that they invest in smaller company stocks that are yet to experience growth. Therefore, it can suit the investors who are willing to take the risk or have the risk appetite to face sudden lows of the fund. 

  1. Long Term Investor

Small cap funds can see sudden fluctuations in the short term, but they are known to perform well over the long term. This enables them to be the most suitable investors who can stay invested in the funds for the long term.

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Factors to Consider Before Investing in Small Cap Mutual Funds

The factors to consider before beginning to invest in top small cap funds are:

Risk Factor: Small cap mutual funds are highly volatile in nature when compared to mid or large cap mutual funds. Moreover, the net asset value of small cap mutual funds fluctuates on a broad range.

Investor Expertise: Small cap mutual funds can deliver high performance on a combination of good strategy and observation. But, these funds are known to be highly volatile. Therefore, it is advisable to investors with good mutual fund investment expertise. 

Investment Term: These types of mutual funds are most suitable for investors with a long investment time horizon. It is mostly not suitable for investors with a short investment tenure. 

Major Advantages

Here are some of the benefits of investing in the best small-cap mutual funds:

  • High growth potential: These funds possess immense growth potential. It’s because small-cap companies have an aggressive expansion strategy that can boost their growth significantly, especially over the long term. 
  • Ability to outperform other equity funds: In case the large-cap and mid-cap funds are not delivering returns per expectations, small-cap mutual funds can be a suitable portfolio inclusion. These tend to offer better gains, thus, balancing your portfolio. 
  • Researched diversification: The best small-cap mutual funds usually invest in stocks of companies with massive potential to generate returns. Fund managers conduct extensive research to analyse the top-performing stocks and invest accordingly. It lets investors diversify their portfolio but with calculated risk. 

Investment route: Investors can allocate their savings to small-cap funds via two ways: lump sum and Systematic Investment Plan (SIP).  By opting for the first option, individuals can invest the total amount they want to invest in at one go. Nevertheless, please note that one may have to invest a minimum of Rs.1,000 in this case. On the contrary, SIP allows investors to allocate their funds to a mutual fund scheme at fixed intervals (monthly, quarterly, etc.). The instalment amount can be as low as Rs.100 in this regard.

Risks Involved While Investing in Small Cap Mutual Funds

While finding the best small cap funds, have a look at the major risks associated-

High Volatility: One of the biggest risks connected with small cap funds is that their prices might fluctuate dramatically. This makes them extremely unstable to invest in because the losses can be substantial if the price does not move in accordance with your expectations. 

Risky Performance: The performance of small cap funds is determined by a number of factors, including stock selection, stock performance, and timely intervention by the fund manager to balance the fund. Since there are so many variables at play, the performance of small cap funds may not be as impressive as one might think. 

Low Liquidity: Small cap mutual funds are rarely invested in by institutional investors. Even among retail investors, though, engagement is typically low. This can cause liquidity concerns and make it more difficult to buy or sell units in the market.

FAQ

Q1. Are small cap funds good for new investors?

Small cap funds are known to have sudden highs, and provide rewarding returns. But, they are also known to be extremely volatile in nature, especially when compared to mid cap and large cap funds. Therefore, investors with more expertise can consider investing in these funds. 

Q2. What type of returns can be earned from small cap funds?

Small Cap Funds deliver stable returns in the long run because, in the short span of duration, they may encounter market fluctuation, resulting in volatile results.

Q3. Is it risky to invest in small cap funds?

It is risky and volatile to invest in small cap funds in the short term, it is when they could encounter major fluctuations. Apart from that, small cap funds can give you rewarding returns in the long run. 

Q4. Are small cap funds suitable for short term investment?

Small cap funds are known to give you high returns in the long term, and perform well over a time period. 

Q5. Who are small cap funds most suitable for?

Small cap funds can be the most suitable for investors with expertise in mutual fund investments. 

Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.

Let's have a closer look

Now let us jump and check about these top 15 mutual fund schemes.

Bank of India Small Cap Fund Direct Growth

Fund Performance: The Bank of India Small Cap Fund has given 31.53% annualized returns in the past three years and 33.86% in the last 5 years. The Bank of India Small Cap Fund comes under the Equity category of BOI AXA Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Bank of India Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹910Cr
1Y Returns51.9%

Axis Small Cap Fund Direct Growth

Fund Performance: The Axis Small Cap Fund has given 30.5% annualized returns in the past three years and 29.97% in the last 5 years. The Axis Small Cap Fund comes under the Equity category of Axis Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Axis Small Cap Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹19,530Cr
1Y Returns44.7%

Nippon India Small Cap Fund Direct Growth

Fund Performance: The Nippon India Small Cap Fund has given 38.07% annualized returns in the past three years and 32.72% in the last 5 years. The Nippon India Small Cap Fund comes under the Equity category of Nippon India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Nippon India Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹45,894Cr
1Y Returns59.7%

HSBC Small Cap Fund Direct Growth

Fund Performance: The HSBC Small Cap Fund has given 36.86% annualized returns in the past three years and 27.22% in the last 5 years. The HSBC Small Cap Fund comes under the Equity category of HSBC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in HSBC Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹13,980Cr
1Y Returns53.7%

Tata Small Cap Fund Direct Growth

Fund Performance: The Tata Small Cap Fund has given 35.3% annualized returns in the past three years and 30.39% in the last 5 years. The Tata Small Cap Fund comes under the Equity category of Tata Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Tata Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹6,125Cr
1Y Returns46.6%

Edelweiss Small Cap Fund Direct Growth

Fund Performance: The Edelweiss Small Cap Fund has given 31.72% annualized returns in the past three years and 31.88% in the last 5 years. The Edelweiss Small Cap Fund comes under the Equity category of Edelweiss Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Edelweiss Small Cap Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹3,156Cr
1Y Returns51.3%

ICICI Prudential Smallcap Fund Direct Plan Growth

Fund Performance: The ICICI Prudential Smallcap Fund has given 31.57% annualized returns in the past three years and 30.67% in the last 5 years. The ICICI Prudential Smallcap Fund comes under the Equity category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Smallcap Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹7,455Cr
1Y Returns48.1%

Kotak Small Cap Fund Direct Growth

Fund Performance: The Kotak Small Cap Fund has given 26.96% annualized returns in the past three years and 29.69% in the last 5 years. The Kotak Small Cap Fund comes under the Equity category of Kotak Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Kotak Small Cap Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹14,425Cr
1Y Returns39.3%

Quant Small Cap Fund Direct Plan Growth

Fund Performance: The Quant Small Cap Fund has given 47.89% annualized returns in the past three years and 40.19% in the last 5 years. The Quant Small Cap Fund comes under the Equity category of Quant Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Quant Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹15,663Cr
1Y Returns75.9%

IDBI Small Cap Fund Direct Growth

Fund Performance: The IDBI Small Cap Fund has given 39.12% annualized returns in the past three years and 16.68% in the last 5 years. The IDBI Small Cap Fund comes under the Equity category of IDBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in IDBI Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹160Cr
1Y Returns24.3%

Canara Robeco Small Cap Fund Direct Growth

Fund Performance: The Canara Robeco Small Cap Fund has given 33.51% annualized returns in the past three years and 29.59% in the last 5 years. The Canara Robeco Small Cap Fund comes under the Equity category of Canara Robeco Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Canara Robeco Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹9,586Cr
1Y Returns43.6%

Franklin India Smaller Companies Direct Fund Growth

Fund Performance: The Franklin India Smaller Companies Direct Fund has given 33.44% annualized returns in the past three years and 26.23% in the last 5 years. The Franklin India Smaller Companies Direct Fund comes under the Equity category of Franklin Templeton Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Franklin India Smaller Companies Direct Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹11,833Cr
1Y Returns58.7%

Invesco India Smallcap Fund Direct Growth

Fund Performance: The Invesco India Smallcap Fund has given 31.91% annualized returns in the past three years and 30.27% in the last 5 years. The Invesco India Smallcap Fund comes under the Equity category of Invesco Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Invesco India Smallcap Fund via lump sum is ₹1,000 and via SIP is ₹500.

Min Investment Amt₹1,000
AUM₹3,658Cr
1Y Returns56.3%

UTI Small Cap Fund Direct Growth

Fund Performance: The UTI Small Cap Fund comes under the Equity category of UTI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in UTI Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹3,736Cr
1Y Returns41.7%

SBI Small Cap Fund Direct Growth

Fund Performance: The SBI Small Cap Fund has given 26.67% annualized returns in the past three years and 27.25% in the last 5 years. The SBI Small Cap Fund comes under the Equity category of SBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in SBI Small Cap Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹24,861Cr
1Y Returns38.8%

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