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Small cap mutual funds focus on small companies with high growth potential, which can lead to significant gains. These funds are more volatile and can have larger price swings, as small-cap stocks are more sensitive to market changes. Small cap funds are ideal for investors with a long-term outlook who can handle higher risk for the chance of larger returns. These funds provide exposure to the early stages of a company’s growth, making them attractive for aggressive investors. They are suited for those looking to diversify beyond established large and mid-sized companies.
Market winners
| Fund Name | 1 Yr. Return | 3 Yr. Return | 5 Yr. Return | Fund Size | Expense Ratio | ||
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Quant Small Cap Fund - Direct (G) | 7.39% | 28.68% | 49.01% | ₹26,222 Cr | 0.68% | |
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Nippon India Small Cap Fund - Direct (G) | 13.27% | 28.25% | 40.01% | ₹58,029 Cr | 0.68% | |
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Invesco India Smallcap Fund - Direct (G) | 23.54% | 29.82% | 35.96% | ₹6,200 Cr | 0.41% | |
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Tata Small Cap Fund - Direct (G) | 16.93% | 26.22% | 36.52% | ₹9,418 Cr | 0.37% | |
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Edelweiss Small Cap Fund - Direct (G) | 16.71% | 25.59% | 36.5% | ₹4,237 Cr | 0.43% | |
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HSBC Small Cap Fund - Direct (G) | 10.41% | 25.04% | 37.17% | ₹14,737 Cr | 0.64% | |
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Franklin India Smaller Companies Fund - Direct (G) | 10.16% | 28.54% | 36.59% | ₹12,530 Cr | 0.97% | |
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Bank of India Small Cap Fund - Direct (G) | 18.65% | 26.33% | 37.42% | ₹1,639 Cr | 0.48% | |
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HDFC Small Cap Fund - Direct (G) | 16.37% | 27.55% | 36.46% | ₹30,880 Cr | 0.78% | |
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Canara Robeco Small Cap Fund - Direct (G) | 13.37% | 20.07% | 36% | ₹11,475 Cr | 0.47% |
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Understanding Small Cap Mutual Funds
Small cap funds invest in small companies with high growth potential, though they are more volatile.
Small cap mutual funds are geared towards investors looking to capitalize on the growth of smaller, less-established companies. These funds can offer significant returns, as small companies often have the potential for rapid expansion. However, they are also more susceptible to market fluctuations, making them riskier than mid or large-cap funds. Small cap funds are best suited for long-term investors who can tolerate higher volatility and are interested in investing in the early stages of a company’s growth. They’re a popular choice for aggressive investors who seek high returns and are willing to ride out market ups and downs.
Best for aggressive investors with a long-term view who can handle higher risk.
Short term capital gains on {{fund_type}} mutual funds are 15%, while long term capital gains are 12.5% (above ₹1.25 lakh).
Small cap funds are high-risk as they invest in smaller, less-established companies that can be very volatile.
Yes, if you have a high-risk appetite and are seeking high growth over the long term.
A long-term holding period of five to ten years is ideal to capture growth in small companies.
Yes, though staying invested long-term can increase your chances of benefiting from substantial growth.
These funds generally have higher expenses, ranging from 1.5% to 2.5%, due to intensive management.
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