Small-cap mutual funds have always been a favourite of investors, and the reason is clear — small but strong companies have the potential to grow rapidly. When these companies grow, their stocks generate big returns, sometimes even higher than mid and large-cap companies. But, with this high return comes the risk as well, as small-cap funds are more sensitive to market volatility. However, in the medium to long term, these funds have performed well and have often given better returns than mid and large-cap funds.
Small-cap stocks have taken a huge hit in the recent market correction. The BSE Smallcap index has plunged by over 22% since December 12 when it hit its lifetime high. This has also affected the returns of mutual funds. In such an environment, when there is selling pressure on small stocks, let’s look at 10 small-cap mutual funds that have given returns of 26% to 40% in the last 5 years.
(Data source: AMFI website, as of February 25, 2025)
1. Quant Small Cap Fund
The regular plan of the scheme has delivered an impressive annualised return of 38.22% over the last 5 years. Its direct plan has given investors 39.96% annualised returns during this period.
Benchmark: NIFTY Smallcap 250 Total Return Index
2. Nippon India Small Cap Fund
The regular plan of the scheme has given an annualized return of 28.60% over the last 5 years. Its direct plan has delivered 29.69% returns during this period.
Benchmark: NIFTY Smallcap 250 Total Return Index
3. Bank of India Small Cap Fund
The fund’s regular plan has given investors a return of 26.87% on annualized basis in the last 5 years and the direct scheme has earned a 28.95% return during this period.
Benchmark: NIFTY Smallcap 250 Total Return Index
Also read: Why balanced advantage funds are ideal in volatile markets
4. Tata Small Cap Fund
The regular plan has given a 26.15% annualized return over the last 5 years. Its direct plan has earned 28.30% annualized returns during this period.
Benchmark: NIFTY Smallcap 250 Total Return Index
5. Canara Robeco Small Cap Fund
The fund’s regular plan has given investors an annualized return of 25.71% in the last 5 years and the direct scheme has earned 27.63% during this period.
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