Top-performing small cap funds have given returns up to 43% in 5 years: Top 10 list

Small cap mutual funds, which invest in companies with relatively small market capitalisation, have historically offered higher return potential compared to large and mid-cap funds — though with greater risks and volatility.

Some small cap schemes have delivered annualised returns of over 40% in the past five years, beating their benchmarks.

According to recent fund performance data (as of July 23), the Quant Small Cap Fund topped the list with an annualised 5-year return of 43.18% in its Direct Plan. Other funds such as the Nippon India Small Cap Fund, Bandhan Small Cap Fund, and HSBC Small Cap Fund have also posted strong double-digit returns over the same period.

Here’s a look at the top 10 best-performing small cap funds over the last five years:

Fund Name	Benchmark	5-Year Return (%) Direct
Quant Small Cap Fund	Nifty Smallcap 250 TRI	43.18%
Nippon India Small Cap Fund	Nifty Smallcap 250 TRI	38.00%
Bandhan Small Cap Fund	BSE 250 Smallcap TRI	37.42%
HSBC Small Cap Fund	Nifty Smallcap 250 TRI	36.11%
Tata Small Cap Fund	Nifty Smallcap 250 TRI	35.27%
Edelweiss Small Cap Fund	Nifty Smallcap 250 TRI	35.20%
Invesco India Smallcap Fund	BSE 250 Smallcap TRI	34.87%
ITI Small Cap Fund	Nifty Smallcap 250 TRI	30.27%
Axis Small Cap Fund	Nifty Smallcap 250 TRI	31.77%
Franklin India Small Cap Fund	Nifty Smallcap 250 TRI	34.82%

(Source: AMFI’s fund performance sheet as on July 23)

Market experts, however, caution that past performance alone should not be the sole reason to invest in small cap funds.

“Small cap schemes can deliver high returns during bullish phases, but they can also see sharp drawdowns during corrections. Investors must assess their own risk tolerance and time horizon before adding such funds to their portfolio,” say financial planners.

Industry advisors recommend that investors looking at small cap exposure should do so through systematic investment plans (SIPs) and remain invested for the long term to ride out market cycles.

ALSO READ | These flexi cap mutual funds have outperformed benchmarks in 5 years