Top 5 Small-Cap Mutual Funds: These Funds Delivered Up To 26.84% Return

Small-cap mutual funds can deliver strong returns, but higher growth potential comes with greater volatility.

Here are the five best-performing funds as of August 9, 2026.

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Key points generated by AI, verified by newsroom

• Five small-cap funds achieved high returns by August 2026.
• Small-cap funds involve higher risk and market volatility.
• Investors should evaluate strategy, portfolio, not just past returns.

As of August 9, 2026, five Small-Cap funds featured among the top performers, with returns ranging from 19.11 per cent to 26.84 per cent. Bank of India Small Cap Fund topped the list with a 26.84 per cent return, followed by TrustMF Small Cap Fund and Motilal Oswal Small Cap Fund.

Before looking at the top-performing funds, it is important to understand what small-cap funds are and why their returns can be accompanied by higher risk.

What Are Small-Cap Funds?

Small-cap Mutual Funds invest primarily in small-cap companies. These businesses are generally smaller in terms of market capitalisation and may have greater room to expand compared with larger, more established companies.

Their relatively smaller size can create opportunities for faster business and earnings growth. If these companies successfully scale their operations, investors can potentially benefit from strong share price appreciation over the long term.

However, the same factor also makes small-cap funds riskier. Smaller companies can be more sensitive to economic slowdowns, changes in interest rates, earnings pressure and shifts in investor sentiment. Their share prices can therefore rise or fall more sharply than those of Large-Cap companies.

This means small-cap funds have the potential to deliver higher returns, but investors also need to be prepared for periods of significant volatility. The category is generally more suitable for investors with a higher risk appetite and a longer investment horizon.

5 Best Performing Small-Cap Funds Rank Fund Name Return (per cent)

1 Bank of India Small Cap Fund 26.84 

2 TrustMF Small Cap Fund 23.11 

3 Motilal Oswal Small Cap Fund 21.54 

4 Union Small Cap Fund 20.93 

5 ITI Small Cap Fund 19.11 

What Investors Should Know

The performance of these funds shows the return potential available in the small-cap segment. However, investors should not evaluate a fund only on the basis of recent returns. Small-cap funds can experience sharp corrections during periods of market stress.

Investors should consider factors such as the fund's investment strategy, portfolio composition, expense ratio, consistency of performance and risk level before making an investment decision. Past returns also do not guarantee future performance. For investors who can tolerate higher volatility and have a long-term investment horizon, small-cap funds can provide exposure to companies with significant growth potential. 

(“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.”)