The Indian stock market is currently going through a phase of volatility, with the Nifty 50 and BSE Sensex hovering below their record highs.
After a good 2023 and 2024, midcaps and smallcaps corrected sharply. This was due to profit-booking, liquidity issues, and high PE multiples, leading investors back to largecaps.
Yet, structural growth for mid and small caps continues to stay intact.
These agile, domestic stocks trail the market in turbulent times only to bounce back with quickly when stability returns.
Mid-cap and small-cap mutual funds have beaten their large-cap counterparts over a complete market cycle, even though they are more volatile.
Market Momentum: Large vs Mid vs Small Cap Funds
Data as on May 27, 2025
Past performance is not an indicator of future returns.
(Source: ACE MF)
To mitigate volatility, a structured SIP-based investment in quality mutual funds is necessary. This will smoothen out the volatility and capture long-term growth for the investor.
In this editorial, we will look at the mutual funds that have delivered the highest returns in the last 10 years…
#1 Nippon India Small Cap Fund
Nippon India Small Cap Fund, launched in September 2010, has been a top performer in its segment over the long term.
Being a small-cap fund, the aim is to find businesses that are frequently under-covered, early stage in their growth cycle, and possibly undervalued.
This provides a high upside, but also more volatility, particularly in market downturns. It might not be ideal for conservative investors or those with short-term objectives.
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The fund currently holds a corpus of Rs 580.28 billion (bn). On a rolling 10-year returns, the fund has delivered a CAGR of 23.52%.
The fund’s top stock exposure includes HDFC Bank Ltd. (2.2%), Multi Commodity Exchange Of India Ltd. (2%), and Dixon Technologies (India) Ltd. (1.3%).
The sector allocation is dominated by capital goods (11.9%), healthcare (8.2%), and chemicals (7.7%).
What differentiates this fund is its resilience in recovering strongly after correction. It fared well after the covid phase in 2020–2021 and in 2023 when small-caps picked up again.
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