Last Updated on Mar 15, 2025 by vanessa sequeira
Did you know that the Securities and Exchange Board of India (SEBI) has defined 12 types of equity funds? One among them is the small-cap mutual fund. They are known to yield higher returns but are also considered risky investments. Let’s dive into them, their features, and the best small-cap mutual funds in 2023.
Table of Contents
What is a small-cap mutual fund?
A small-cap mutual fund is an equity mutual fund that invests a minimum of 65% in the stocks of companies with a market capitalisation of less than Rs. 5,000 cr. The stocks that are ranked 251 and below are called small-cap stocks. Small-cap mutual funds are highly volatile but also tend to offer higher returns.
Since they are risky, these funds are suitable for aggressive investors. They can be considered for a long-term investment horizon. However, investments in small-cap equity mutual funds do not provide any tax benefit.
Read “What Is Small Cap Fund – Meaning, Features, Benefits and How To Invest” to learn more about it.
Best Small Cap Mutual Funds
Based on AUM
| Mutual fund name | AUM (Rs. in cr.) | Absolute Returns – 1Y (%) | Minimum SIP (Rs.) | Exit Load (%) | Expense Ratio (%) |
| Nippon India Small Cap Fund | 36,539.55 | 34.37 | 100.00 | 1.00 | 0.72 |
| HDFC Small Cap Fund | 21,066.56 | 38.68 | 5,000.00 | 1.00 | 0.75 |
| SBI Small Cap Fund | 20,911.70 | 19.08 | 0.00 | 1.00 | 0.69 |
| Axis Small Cap Fund | 15,025.00 | 22.75 | 0.00 | 1.00 | 0.55 |
| DSP Small Cap Fund | 12,083.25 | 26.28 | 0.00 | 1.00 | 0.90 |
| Kotak Small Cap Fund | 11,597.03 | 19.88 | 100.00 | 1.00 | 0.43 |
| HSBC Small Cap Fund | 11,549.40 | 31.02 | 1,000.00 | 1.00 | 0.71 |
| Franklin India Smaller Cos Fund | 9,595.27 | 33.95 | 0.00 | 1.00 | 0.96 |
| Quant Small Cap Fund | 8,075.14 | 35.39 | 1,000.00 | 1.00 | 0.77 |
| Canara Rob Small Cap Fund | 7,577.29 | 19.36 | 1,000.00 | 1.00 | 0.42 |
Note: The information is dated 26th September 2023. The parameters used to filter the list of small-cap mutual funds on Tickertape Mutual Fund Screener are:
- Category – Small-Cap Funds (Equity)
- Plan – Growth
- AUM – Sort from highest to lowest
Based on 3-yr CAGR
| Mutual fund name | AUM (Rs. in cr.) | CAGR 3Y (%) | CAGR 5Y (%) |
| Quant Small Cap Fund | 8,075.14 | 48.41 | 30.48 |
| Nippon India Small Cap Fund | 36,539.55 | 44.75 | 25.44 |
| HSBC Small Cap Fund | 11,549.40 | 43.29 | 20.88 |
| HDFC Small Cap Fund | 21,066.56 | 42.12 | 20.79 |
| Tata Small Cap Fund | 5,683.23 | 41.23 | 0.00 |
| ICICI Pru Smallcap Fund | 6,510.80 | 40.00 | 24.67 |
| Franklin India Smaller Cos Fund | 9,595.27 | 39.77 | 19.50 |
| Canara Rob Small Cap Fund | 7,577.29 | 39.58 | 0.00 |
| Edelweiss Small Cap Fund | 2,145.98 | 39.34 | 0.00 |
| Kotak Small Cap Fund | 11,597.03 | 38.33 | 24.73 |
Note: The information is dated 26th September 2023. The parameters used to filter the list of small-cap mutual funds on Tickertape Mutual Fund Screener are:
- Category – Small-Cap Funds (Equity)
- Plan – Growth
- CAGR – 3Y – set to High
Based on Volatility
| Mutual fund name | AUM (Rs. in cr.) | Volatility (%) | CAGR 3Y (%) |
| Sundaram Emerging Small Cap-Sr-VII | 159.75 | 8.33 | 33.75 |
| Kotak Small Cap Fund | 11,597.03 | 9.11 | 38.33 |
| Axis Small Cap Fund | 15,025.00 | 9.28 | 35.37 |
| SBI Small Cap Fund | 20,911.70 | 9.45 | 34.25 |
| Sundaram Small Cap Fund | 2,581.76 | 9.93 | 37.55 |
| ICICI Pru Smallcap Fund | 6,510.80 | 9.97 | 40.00 |
| UTI Small Cap Fund | 2,972.06 | 10.06 | 0.00 |
| Canara Rob Small Cap Fund | 7,577.29 | 10.30 | 39.58 |
| Invesco India Smallcap Fund | 2,436.35 | 10.38 | 35.54 |
| Union Small Cap Fund | 974.09 | 10.39 | 35.61 |
Note: The information is dated 26th September 2023. The parameters used to filter the list of small-cap mutual funds on Tickertape Mutual Fund Screener are:
- Category – Small-Cap Funds (Equity)
- Plan – Growth
- Volatility – Sort from lowest to highest
Based on 1-yr Absolute returns
| Mutual fund name | AUM (Rs. in cr.) | Absolute Returns – 1Y (%) | Minimum SIP (Rs.) |
| HDFC Small Cap Fund | 21,066.56 | 38.68 | 5000 |
| Quant Small Cap Fund | 8,075.14 | 35.39 | 1000 |
| Nippon India Small Cap Fund | 36,539.55 | 34.37 | 100 |
| Franklin India Smaller Cos Fund | 9,595.27 | 33.95 | 0 |
| HSBC Small Cap Fund | 11,549.40 | 31.02 | 1000 |
| ITI Small Cap Fund | 1,450.13 | 29.91 | 500 |
| Bandhan Emerging Businesses Fund | 2,014.27 | 28.57 | 100 |
| Tata Small Cap Fund | 5,683.23 | 28.51 | 1500 |
| Sundaram Small Cap Fund | 2,581.76 | 27.94 | 0 |
| DSP Small Cap Fund | 12,083.25 | 26.28 | 0 |
Note: The information is dated 26th September 2023. The parameters used to filter the list of small-cap mutual funds on Tickertape Mutual Fund Screener are:
- Category – Small-Cap Funds (Equity)
- Plan – Growth
- 1-yr Absolute Returns – Sort from highest to lowest
In a nutshell
Small-cap mutual funds are funds that invest in companies with smaller market capitalisation. They are risky and have a high potential for growth in future. Consult your financial advisor before investing in mutual funds to choose the right scheme for your portfolio. You can use Tickertape Mutual Fund Screener to filter small-cap mutual funds based on your preference. Don’t worry. For your research and investment needs, Tickertape hai na!
FAQs
1. Are small-cap mutual funds a good investment?
There are a few small-cap funds that provide great returns and has growth potential. However, they are also considered highly risky investments. Hence, consult your financial advisor before investing.
2. What are the benefits of small-cap mutual funds?
There are some benefits involved when you invest in small-cap funds, such as the potential for higher returns, risk diversification, lower rates, and excellent performance during a bull market.
3. Are small-cap funds risky?
Small-cap funds invest in companies that have a market capitalisation of less than Rs. 5,000 cr. They tend to offer better returns. However, they are riskier investments than mid- and large-cap funds.
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
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