Best Performing Small Cap Mutual Fund

The table below shows a list of the Best Performing Small Cap Mutual Funds Based on AUM, NAV, and minimum SIP.

Name	AUM (Cr)	NAV (Rs)	Minimum SIP (Rs)
Nippon India Small Cap Fund	60372.55	199.38	100
HDFC Small Cap Fund	33181.88	159.51	5000
SBI Small Cap Fund	32761.17	206.39	100
Axis Small Cap Fund	23399.15	120.09	100
Quant Small Cap Fund	22967.17	300.26	1000
Kotak Small Cap Fund	17507.11	322.06	100
HSBC Small Cap Fund	16396.94	95.78	500
DSP Small Cap Fund	16084.62	219.46	100
Franklin India Smaller Cos Fund	14474.51	206.89	100
Canara Rob Small Cap Fund	11499.07	44.78	1000

Introduction To Best Small Cap Mutual Funds In India

Nippon India Small Cap Fund

Nippon India Small Cap Fund is a Small Cap mutual fund scheme from Nippon India Mutual Fund. This fund has been in existence for 11 years and 7 months, having been launched on January 1, 2013.

Nippon India Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹60,372.54 Crores, a 5-year CAGR of 40.48%, an exit load of 1%, and an expense ratio of 0.63%. SEBI rates the risk as Very High. The asset allocation includes 4.15% in Cash & Equivalents and 95.85% in Equity.

HDFC Small Cap Fund

HDFC Small Cap Fund is a Small Cap mutual fund scheme from HDFC Mutual Fund. This fund has been in existence for 11 years and 7 months, having been launched on January 1, 2013.

HDFC Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹33,181.88 Crores, a 5-year CAGR of 32.22%, an exit load of 1%, and an expense ratio of 0.64%. SEBI rates the risk as Very High. The asset allocation includes 7.15% in Cash & Equivalents and 92.85% in Equity.

SBI Small Cap Fund

SBI Small Cap Fund is a Small Cap mutual fund scheme from SBI Mutual Fund. This fund has been in existence for 11 years and 7 months, having been launched on January 1, 2013.

SBI Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹32,761.17 Crores, a 5-year CAGR of 32.10%, an exit load of 1%, and an expense ratio of 0.65%. SEBI rates the risk as Very High. The asset allocation includes Cash & Equivalents and Equity.

Axis Small Cap Fund

Axis Small Cap Fund is a Small Cap mutual fund scheme from Axis Mutual Fund. This fund has been in existence for 10 years and 8 months, having been launched on November 11, 2013.

Axis Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹23,399.15 Crores, a 5-year CAGR of 31.94%, an exit load of 1%, and an expense ratio of 0.54%. SEBI rates the risk as Very High. The asset allocation includes Rights, Treasury Bills, Futures & Options, Cash & Equivalents, and Equity.

Quant Small Cap Fund

Quant Small Cap Fund is a Small Cap mutual fund scheme from Quant Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on January 1, 2013.

Quant Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹22,967.17 Crores, a 5-year CAGR of 52.34%, an exit load of 1%, and an expense ratio of 0.64%. SEBI rates the risk as Very High. The asset allocation includes Mutual Funds, Futures & Options, Treasury Bills, 14.74% in Cash & Equivalents, and 84.05% in Equity.

Kotak Small Cap Fund

Kotak Small Cap Fund is a Small Cap mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been in existence for 11 years and 7 months, having been launched on January 1, 2013.

Kotak Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹17,507.11 Crores, a 5-year CAGR of 36.17%, an exit load of 1%, and an expense ratio of 0.49%. SEBI rates the risk as Very High. The asset allocation includes 3.76% in Cash & Equivalents and 96.24% in Equity.

HSBC Small Cap Fund

HSBC Small Cap Fund is a Small Cap mutual fund scheme from HSBC Mutual Fund. This fund has been in existence for 10 years and 4 months, having been launched on April 22, 2014.

HSBC Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹16,396.94 Crores, a 5-year CAGR of 34.32%, an exit load of 1%, and an expense ratio of 0.68%. SEBI rates the risk as Very High. The asset allocation includes 0.10% in Rights, 1.66% in Cash & Equivalents, and 98.23% in Equity.

DSP Small Cap Fund

DSP Small Cap Fund is a Small Cap mutual fund scheme from DSP Mutual Fund. This fund has been in existence for 11 years and 7 months, having been launched on January 1, 2013.

DSP Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹16,084.62 Crores, a 5-year CAGR of 34.52%, an exit load of 1%, and an expense ratio of 0.81%. SEBI rates the risk as Very High. The asset allocation includes 6.40% in Cash & Equivalents and 93.60% in Equity.

Franklin India Smaller Companies Fund

Franklin India Smaller Companies Fund is a Small Cap mutual fund scheme from Franklin Templeton Mutual Fund. This fund has been in existence for 11 years and 7 months, having been launched on January 1, 2013.

Franklin India Smaller Companies Fund is categorized as a Small Cap Fund with an AUM of ₹14,474.51 Crores, a 5-year CAGR of 33.06%, an exit load of 1%, and an expense ratio of 0.91%. SEBI rates the risk as Very High. The asset allocation includes 0.10% in Rights, 0.14% in Preferred Shares, 0.17% in Treasury Bills, 3.50% in Cash & Equivalents, and 96.10% in Equity.

Canara Robeco Small Cap Fund

Canara Robeco Small Cap Fund is a Small Cap mutual fund scheme from Canara Robeco Mutual Fund. This fund has been in existence for 5 years and 7 months, having been launched on January 25, 2019.

Canara Robeco Small Cap Fund is categorized as a Small Cap Fund with an AUM of ₹11,499.07 Crores, a 5-year CAGR of 39.06%, an exit load of 1%, and an expense ratio of 0.42%. SEBI rates the risk as Very High. The asset allocation includes 0.08% in Rights, 3.63% in Cash & Equivalents, and 96.29% in Equity.

Small Cap Mutual Funds Meaning

Small Cap Mutual Funds are equity mutual funds that primarily invest in stocks of small-sized companies, typically ranked below 250 in terms of market capitalization. These funds aim to capitalize on the high growth potential of emerging companies that are in the early stages of their business lifecycle.

Small Cap funds invest in companies that are relatively new or operate in niche markets. These companies often have the potential for rapid growth but also carry higher risks compared to larger, more established companies.

These funds can offer potentially higher returns compared to large-cap or mid-cap funds but also come with higher volatility and risk. They are suitable for investors with a high-risk appetite and a long-term investment horizon.

Features Of Top Small Cap Mutual Funds

The main features of top Small Cap Mutual Funds include exposure to small-sized companies, high growth potential, higher risk and volatility, professional management, and diversification within the small-cap segment. These funds offer opportunities to invest in emerging companies with significant growth prospects.

• Small-cap focus: These funds primarily invest in small-sized companies, typically ranked below 250 in terms of market capitalization, offering exposure to businesses in the early stages of growth.

• High growth potential: Small-cap companies often have higher growth potential compared to larger companies, as they have more room for expansion and can be more agile in adapting to market changes.

• Higher risk and volatility: Small-cap stocks tend to be more volatile and carry higher risk compared to large-cap or mid-cap stocks, leading to the potential for significant gains or losses.

• Professional management: Small Cap funds are managed by experienced fund managers who conduct thorough research to identify promising small-sized companies with strong growth prospects.

Best Performing Small Cap Mutual Fund

The table below shows the Best Performing Small Cap Mutual Funds Based on the lowest to highest expense ratio.

Name	Expense Ratio (%)	Minimum SIP (Rs)
Canara Rob Small Cap Fund	0.42	1000
Kotak Small Cap Fund	0.49	100
Axis Small Cap Fund	0.54	100
Nippon India Small Cap Fund	0.63	100
HDFC Small Cap Fund	0.64	5000
Quant Small Cap Fund	0.64	1000
SBI Small Cap Fund	0.65	100
HSBC Small Cap Fund	0.68	500
DSP Small Cap Fund	0.81	100
Franklin India Smaller Cos Fund	0.91	100

Small Cap Mutual Funds List

The table below shows the Small Cap Mutual Funds List Based on the Highest 3Y CAGR.

Name	CAGR 3Y (Cr)	Minimum SIP (Rs)
Quant Small Cap Fund	36.65	1000
Nippon India Small Cap Fund	35.69	100
Franklin India Smaller Cos Fund	33.34	100
HSBC Small Cap Fund	32.59	500
Canara Rob Small Cap Fund	30.63	1000
HDFC Small Cap Fund	29.83	5000
DSP Small Cap Fund	29.00	100
SBI Small Cap Fund	27.29	100
Axis Small Cap Fund	26.70	100
Kotak Small Cap Fund	25.72	100

Top 10 Small Cap Mutual Funds

The table below shows the Top 10 Small Cap Mutual Funds Based on exit load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.

Name	AMC	Exit Load (%)
Quant Small Cap Fund	Quant Money Managers Limited	1
Nippon India Small Cap Fund	Nippon Life India Asset Management Limited	1
Franklin India Smaller Cos Fund	Franklin Templeton Asset Management (India) Private Limited	1
HSBC Small Cap Fund	HSBC Global Asset Management (India) Private Limited	1
Canara Rob Small Cap Fund	Canara Robeco Asset Management Company Limited	1
HDFC Small Cap Fund	HDFC Asset Management Company Limited	1
DSP Small Cap Fund	DSP Investment Managers Private Limited	1
SBI Small Cap Fund	SBI Funds Management Limited	1
Axis Small Cap Fund	Axis Asset Management Company Ltd.	1
Kotak Small Cap Fund	Kotak Mahindra Asset Management Company Limited	1

High Return Small Cap Mutual Funds

The table below shows High Return Small Cap Mutual Funds Based on 1 Year return.

Name	Absolute Returns – 1Y (%)	Minimum SIP (Rs)
Quant Small Cap Fund	57.69	1000
Franklin India Smaller Cos Fund	52.72	100
Nippon India Small Cap Fund	52.48	100
HSBC Small Cap Fund	46.82	500
Canara Rob Small Cap Fund	45.34	1000
Kotak Small Cap Fund	44.25	100
DSP Small Cap Fund	43.80	100
Axis Small Cap Fund	41.17	100
SBI Small Cap Fund	39.77	100
HDFC Small Cap Fund	39.38	5000

Historical Performance Of Best Performing Small Cap Mutual Fund

The table below shows the Historical Performance Of Best Performing Small Cap Mutual Funds Based on 5 Year return

Name	CAGR 5Y (Cr)	Minimum SIP (Rs)
Quant Small Cap Fund	52.34	1000
Nippon India Small Cap Fund	40.48	100
Canara Rob Small Cap Fund	39.06	1000
Kotak Small Cap Fund	36.17	100
DSP Small Cap Fund	34.52	100
HSBC Small Cap Fund	34.32	500
Franklin India Smaller Cos Fund	33.06	100
HDFC Small Cap Fund	32.22	5000
SBI Small Cap Fund	32.10	100
Axis Small Cap Fund	31.94	100

Factors To Consider When Investing In Top Small Cap Mutual Funds

When investing in top Small Cap Mutual Funds, consider the fund’s historical performance, expense ratio, fund manager’s expertise, portfolio composition, and your risk tolerance. Also, evaluate the fund’s investment strategy and its alignment with your financial goals.

• Historical performance: Analyze the fund’s past returns over various time periods (1-year, 3-year, and 5-year) and compare them with its benchmark index and category average. Look for consistent performance rather than just short-term gains.

• Expense ratio: Compare expense ratios across different small-cap funds. A lower expense ratio can contribute to better overall returns, but also consider the fund’s performance and strategy.

• Fund manager expertise: Evaluate the fund manager’s experience and track record in managing small-cap funds. Their ability to identify promising small-sized companies is crucial for fund performance.

• Portfolio composition: Examine the fund’s sector allocation and top holdings. Ensure the fund maintains a true small-cap focus and is sufficiently diversified across sectors.

• Risk measures: Assess risk metrics such as standard deviation and Sharpe ratio. These indicators can help you understand the fund’s volatility and risk-adjusted returns.

How To Invest In A Small Cap Mutual Fund? 

To invest in Small Cap Mutual Funds, start by researching and comparing different funds based on their performance, expense ratios, and investment strategies. Once you’ve selected a fund that aligns with your financial goals and risk tolerance, you can invest through Alice Blue.

Alice Blue is a user-friendly online investment platform that provides tools and resources to help you make informed investment decisions. You can choose to invest a lump sum amount or opt for a Systematic Investment Plan (SIP), which allows you to invest a fixed amount regularly.

For most investors, a SIP is recommended as it helps in rupee cost averaging and reduces the impact of market volatility on your investment over time. Remember to review and rebalance your investment periodically to ensure it remains aligned with your financial goals.

Impact Of Market Trends On Best Performing Small Cap Mutual Fund

Market trends significantly influence Small Cap Mutual Funds due to their focus on small-sized companies. These funds tend to be highly sensitive to economic cycles and market sentiment. During periods of economic growth and positive market sentiment, small-cap stocks often outperform larger companies.

Conversely, in times of economic uncertainty or market downturns, small-cap stocks may face higher volatility and steeper declines. The performance of Small Cap Mutual Funds can also be influenced by sector-specific trends, as many small-cap companies operate in niche or emerging sectors.

How Top Small Cap Mutual Funds Perform In Volatile Markets?

Top Small Cap Mutual Funds can experience high volatility in turbulent markets. Small-cap stocks are often more sensitive to economic changes and market sentiment compared to larger companies. During market downturns, these funds may face steeper declines due to lower liquidity and higher perceived risk.

However, they also have the potential for quicker and stronger recovery when markets rebound. The fund manager’s skill in selecting resilient small-cap stocks and maintaining a well-diversified portfolio can help mitigate some of the volatility. Regular investments through SIPs can help average out the impact of market fluctuations.

What Are The Benefits Of Small-cap Funds?

The main benefits of Small-cap Funds include high growth potential, exposure to emerging companies, potential for superior returns, and diversification benefits. These funds offer opportunities to invest in companies at the early stages of their growth cycle with significant expansion prospects.

• High growth potential: Small-cap companies often have higher growth potential compared to larger companies, as they have more room for expansion and can be more agile in adapting to market changes.

• Exposure to emerging companies: Small-cap funds provide access to companies that could become future market leaders. Investing in these potential future giants early can lead to substantial long-term gains.

• Potential for superior returns: Historically, small-cap stocks have outperformed large-cap stocks over long periods, offering the potential for higher returns, albeit with higher risk.

• Diversification: Including small-cap funds in a portfolio can enhance overall diversification, as small-cap stocks often behave differently from large-cap stocks in various market conditions.

What Is The Disadvantage Of Small-cap Fund?

The main disadvantages of Small-cap Funds include higher volatility, increased risk, liquidity issues, and the potential for higher losses. These factors can impact the fund’s performance and lead to significant fluctuations in returns, making them suitable only for high-risk-tolerant investors.

• Higher volatility: Small-cap stocks tend to be more volatile than large-cap, leading to the potential for higher short-term fluctuations in fund value. This can result in significant gains or losses over short periods.

• Increased risk: Small-cap companies are often less established and more vulnerable to economic downturns, competitive pressures, and business challenges, increasing the risk of investment losses.

• Liquidity issues: Small-cap stocks may have lower trading volumes, potentially making it difficult for fund managers to buy or sell large quantities without impacting stock prices.

• Potential for higher losses: The higher risk associated with small-cap stocks means these funds can experience steeper declines during market downturns compared to large-cap or mid-cap funds.

Contribution Of Small Cap Mutual Fund To Portfolio Diversification

Small Cap Mutual Funds contribute significantly to portfolio diversification by providing exposure to a segment of the market that offers high growth potential. These funds invest in smaller companies that are often overlooked by larger investors, potentially capturing unique growth opportunities.

By including Small Cap funds alongside large-cap and mid-cap investments, investors can create a well-rounded equity portfolio. This diversification can help balance the stability of large caps with the high growth potential of small caps, potentially optimizing the risk-return profile of the overall investment portfolio.

Who Should Invest In The Best Small Cap Mutual Fund?

Best Small Cap Mutual Funds are suitable for investors with a high-risk tolerance and a long-term investment horizon, typically 7-10 years or more. They are ideal for those seeking high growth potential and are willing to accept significant volatility in pursuit of potentially superior returns.

These funds can be appropriate for younger investors in their wealth accumulation phase, looking to benefit from the growth potential of emerging companies. However, investors should have the capacity to withstand substantial short-term market fluctuations and should ideally have a diversified portfolio that includes other asset classes.

Small Cap Mutual Fund Taxation

Small Cap Mutual Funds are taxed as equity mutual funds in India. For holding periods up to 1 year, gains are considered short-term capital gains and taxed at 15%. For holding periods over 1 year, long-term capital gains up to ₹1 lakh per financial year are tax-free.

Long-term capital gains exceeding ₹1 lakh are taxed at 10% without indexation benefits. It’s important to note that these tax rates are subject to change based on government policies. The tax efficiency of equity funds like Small Cap funds can make them attractive for long-term investors.

Impact Of Fund Manager Expertise On Small Cap Mutual Fund Performance

The expertise of the fund manager plays a crucial role in the performance of Small Cap Mutual Funds. A skilled manager can add significant value through their ability to identify promising small-sized companies with strong growth potential and sound fundamentals.

The manager’s expertise in analyzing business models, assessing management quality, and understanding niche markets is particularly important in the small-cap segment. Their decisions on stock selection and portfolio allocation can greatly influence the fund’s ability to generate alpha and manage the higher risks associated with small-cap investing.

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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.