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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 FundEquityModerately High23.3%5star3,632
Kotak Small Cap FundEquityModerately High33.1%4star2,372
SBI Small Cap FundEquityModerately High32.1%4star6,628
Nippon India Small Cap FundEquityModerately High24.7%4star10,916
Edelweiss Small Cap FundEquityHigh32.1%4star623
Canara Robeco Small Cap FundEquityModerately High36.9%4star640
Union Small Cap FundEquityModerately High26.0%3star402
ICICI Prudential Small Cap FundEquityModerately High21.4%3star1,778
HDFC Small Cap FundEquityModerately High17.4%3star9,596
DSP Small Cap FundEquityModerately High26.0%3star6,001
IDBI Small Cap FundEquityModerately High17.1%3star119
L&T Emerging Businesses FundEquityHigh13.3%3star5,733
Principal Small Cap FundEquityModerately High35.7%3star266
BOI AXA Small Cap FundEquityModerately High50.5%3star94
Motilal Oswal Nifty Smallcap 250 Index FundEquityModerately High21.1%3star95
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 12.94% annualized returns in the last three years. In the last year, its returns were 23.28%. 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 23.28% 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
AUM3,632Cr
1Y Returns23.3%

Kotak Small Cap Fund Direct Growth

Fund Performance: This fund has given 8.28% annualized returns in the last three years. In the last year, its returns were 33.11%. 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 33.11% 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
AUM2,372Cr
1Y Returns33.1%

SBI Small Cap Fund Direct Growth

Fund Performance: This fund has given 6.34% annualized returns in the last three years. In the last year, its returns were 32.08%. 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 32.08% returns in the last one year. . Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹5,000
AUM6,628Cr
1Y Returns32.1%

Nippon India Small Cap Fund Direct Growth

Fund Performance: This fund has given 3.23% annualized returns in the last three years. In the last year, its returns were 24.69%. 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 24.69% 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
AUM10,916Cr
1Y Returns24.7%

Edelweiss Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 32.1%. 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 32.1% 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
AUM623Cr
1Y Returns32.1%

Canara Robeco Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 36.85%. 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 36.85% 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 ₹1,000.

Min Investment Amt₹5,000
AUM640Cr
1Y Returns36.9%

Union Small Cap Fund Direct Growth

Fund Performance: This fund has given 3.51% annualized returns in the last three years. In the last year, its returns were 26.03%. 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 26.03% 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
AUM402Cr
1Y Returns26.0%

ICICI Prudential Smallcap Fund Direct Plan Growth

Fund Performance: This fund has given 3.38% annualized returns in the last three years. In the last year, its returns were 21.39%. 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 21.39% 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
AUM1,778Cr
1Y Returns21.4%

HDFC Small Cap Fund Direct Growth

Fund Performance: This fund has given 1.64% annualized returns in the last three years. In the last year, its returns were 17.36%. 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 17.36% 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
AUM9,596Cr
1Y Returns17.4%

DSP Small Cap Direct Plan Growth

Fund Performance: This fund has given 1.27% annualized returns in the last three years. In the last year, its returns were 25.98%. 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 25.98% 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
AUM6,001Cr
1Y Returns26.0%

IDBI Small Cap Fund Direct Growth

Fund Performance: This fund has given 1.12% annualized returns in the last three years. In the last year, its returns were 17.08%. 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 17.08% 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
AUM119Cr
1Y Returns17.1%

L&T Emerging Businesses Fund Direct Growth

Fund Performance: This fund has given -1.02% annualized returns in the last three years. In the last year, its returns were 13.34%. 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 13.34% 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
AUM5,733Cr
1Y Returns13.3%

Principal Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 35.69%. 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 35.69% 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
AUM266Cr
1Y Returns35.7%

BOI AXA Small Cap Fund Direct Growth

Fund Performance: In the last year, its returns were 50.47%. 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 50.47% 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
AUM94Cr
1Y Returns50.5%

Motilal Oswal Nifty Smallcap 250 Index Fund Direct Growth

Fund Performance: In the last year, its returns were 21.06%. 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 21.06% 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
AUM95Cr
1Y Returns21.1%

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