Small-Cap Fund SIP: These 3 Mutual Funds Delivered More Than 20% Annualised Returns

Small-cap mutual funds can offer higher growth potential but also carry greater volatility. Here are three schemes that delivered over 20% annualised returns on a five-year monthly SIP basis.

Small-cap mutual funds are equity mutual funds that invest predominantly in small-cap companies.

Source : https://pixabay.com/

Show Quick Read

Key points generated by AI, verified by newsroom

• Small-cap funds invest in smaller companies, seeking growth potential.
• However, these funds carry higher risk and market volatility.
• Evaluate factors beyond past returns for informed fund selection.

Small-Cap Mutual Funds have attracted investors looking for higher growth potential from smaller companies. These funds invest predominantly in small-cap stocks, which can benefit from India's long-term economic expansion and the growth of emerging businesses. However, the possibility of higher returns comes with higher risk.

Small-cap companies can be more vulnerable to economic slowdowns, rising costs and difficult market conditions. Their share prices can also see sharp swings. This makes it important for investors to look beyond past returns while selecting a small-cap mutual fund.

What is a Small Cap Mutual Fund?

Small-cap mutual funds are equity mutual funds that invest predominantly in small-cap companies. Under the Securities and Exchange Board of India (SEBI) classification, small-cap companies are ranked below the top 250 listed companies by full market capitalisation. These companies are generally smaller than Large-Cap and Mid-Cap businesses.

Some may be in the early stages of building their market presence and have significant room to expand. For investors, this creates an opportunity to participate in businesses that could become larger companies over the long term. At the same time, smaller businesses may have less financial strength and fewer resources to withstand difficult market conditions. As a result, small-cap funds can be considerably more volatile than large-cap funds. 

Top Small Cap Mutual Fund Schemes by 5-Year SIP Returns

Based on the data provided, 35 small-cap mutual fund schemes are available for comparison. Among the schemes listed, the following have delivered strong annualised returns over a five-year monthly SIP period:

Fund Fund Size 5-Year SIP Return (p.a.)

ITI Small Cap Fund ₹3,454 crore 21.98 per cent

Bandhan Small Cap Fund ₹31,103 crore 21.70 per cent

Invesco India Smallcap Fund ₹14,475 crore 20.98 per cent

Should You Invest Based Only on Past Returns?

No. Past performance is useful for understanding how a fund has performed during different market conditions. But it does not tell the complete story. Two small-cap funds can generate different returns even when they invest in the same broad category. Their portfolio composition, stock-selection approach, sector exposure and risk management can vary significantly. Investors should therefore consider several factors before selecting a fund.

(“Disclaimer: This article uses information originally published by Dalal Street Investment Journal (DSIJ). The views expressed are those of the original authors and not necessarily of ABP Network Pvt. Ltd. This content is provided for general informational and educational purposes only and should not be construed as investment, financial, legal or tax advice. Readers are advised to conduct their own research and/or consult a qualified financial advisor before making any investment decisions. This content is for informational purposes only and should not be treated as investment advice. ABP Network, its employees and associates shall not be responsible or liable for any losses or damages arising directly or indirectly from the use of or reliance on this article or any information contained herein.”)