Among all the equity schemes in the Quant Mutual Fund stable, the Quant Small Cap Fund is the largest scheme, with Assets Under Management (AUM) worth Rs 33,739 crore (as per the June 2026 portfolio). It would not be incorrect to say that it is one of investors’ favourites.
The scheme is among the top 5 small cap funds in India by AUM, ranking fourth, after the Nippon India Small Cap Fund, HDFC Small Cap Fund, and SBI Small Cap Fund.
What has attracted investors to Quant Small Cap Fund is the potential to deliver stellar returns so far. It is among the top-performing schemes across longer time periods.
What’s attracting investors is Quant Mutual Fund’s investment philosophy, wherein it believes in being relevant by staying active in this dynamic world (which is currently witnessing geopolitical tensions and technology disruptions).
It believes that being relevant requires absolute focus on returns, and accordingly it crafts its investment strategy and takes an unconstrained perspective by relying on a unique Valuation, Liquidity, Risk Appetite, and Time (VLRT) framework that allows managers to actively shift stocks rather than holding them for long cycles.
Has this approach helped?
Well, if we consider the recent period from 1 January 2026 to 31 March 2026, when volatility gripped the Indian equity market due to the West Asia war, oil prices surged to over US $100 per barrel, there were supply chain disruptions, and the Indian rupee depreciated, Quant Small Cap Fund fell around 13.3%.
Performance of Quant Small Cap Fund from 1 January 2026 to 31 March 2026
This drawdown was slightly more than that of Nippon India Small Cap Fund (-11.6%), SBI Small Cap Fund (-12.5%), and Axis Small Cap Fund (-11.1%).
That said, compared to HDFC Small Cap Fund (-14.6%) and the BSE 250 SmallCap – TRI (-15.2%) during the period 1 January 2026 to 31 March 2026, Quant Small Cap Fund’s drawdown was less.
In the corrective phase, the unwinding of momentum due to geopolitical tensions in West Asia weighed on Quant Small Cap Fund’s performance.
High-beta momentum stocks (such as Adani Power, Aegis Logistics, and RBL Bank, that were part of top-10 holdings of the fund as per the January 2026 portfolio) underwent sharp price and valuation mean-reversions, affecting the performance of the scheme, which has been following momentum, rather than traditional value or growth, or a blend of the two (i.e., a mix of value and growth) or growth at reasonable prices (GARP), followed by some of its peers.
Also, Reliance Industries (9.5%) and Jio Financial Services (5.6%), which together made up 15.1% of the January 2026 portfolio, displayed subdued performance and capped upside performance relative to pure-play small-cap peers.
Quant Small Cap Fund, in response to high volatility in small-caps (and risk indicators), also tactically increased its allocation to cash and non-equity assets (in the range of 12-15%).
How has been the performance from 1 April 2026 till date?
In the ensuing period from 1 April 2026 to 24 July 2026, when the small-caps significantly outperformed the frontline stocks, Quant Small Cap Fund has gained 23.5%. In other words, it made up for all the wealth erosion that happened in the preceding three months.
Quant Small Cap Fund Performance Since April 2026
This gain is noticeably higher than some of its peers, such as Nippon India Small Cap Fund (17.9%), HDFC Small Cap Fund (16.4%), SBI Small Cap Fund (17.9%), and Axis Small Cap Fund (20.7%), and the BSE 250 SmallCap – TRI (which gained 18.7%).
This comeback was due to active portfolio rebalancing and sector rotation. The fund deployed some sidelined cash with conviction, and it paid off.
Stocks such as RBL Bank, Adani Power, HFCL (the high-beta holdings), Adani Green Energy, Piramal Finance, and Sun TV, among others, which were a part of the top 10 holdings as of 30 April 2026, rallied sharply during the period 1 April 2026 to 24 July 2026 after plummeting in the preceding three months. In other words, the high-conviction equity positions paid off.
The fund actively rotated capital out of lagging cyclical names into fresh momentum leaders. From April 2026, the fund made fresh entries into stocks such as Kalyani Steels, Lloyd Metals & Energy, PTC India, Triveni Turbine, and LIC Housing, among others, which witnessed a sharp run after April 2026 and rewarded the fund.
The fund also made complete exits from stocks such as Reliance Industries, Jio Financial Services, Praj Industries, Exide Industries and Aarti Industries, among others, which were proving to be laggards and as risk indicators and valuations turned unfavourable.
This highlights the fund’s dynamic, short-term tactical rotation style under its VLRT quantitative framework.
With such an approach, in the past 6 months, the fund has clocked 22.3% absolute returns for its investors. It’s been a rollercoaster amidst a volatile equity market, but the fund has rewarded its investors well.
Report Card of Quant Small Cap Fund
| Absolute | CAGR | ||||
| 6 Mths (%) | 1 Yr (%) | 3 Yr (%) | 5 Yr (%) | 10 Yr (%) | |
| Quant Small Cap Fund | 22.3 | 8.0 | 19.3 | 19.1 | 20.6 |
| Category Median | 16.6 | 5.7 | 16.6 | 17.1 | 17.3 |
| BSE 250 SmallCap – TRI | 14.1 | -1.9 | 15.1 | 14.4 | 14.9 |
The returns data is as of 24 July 2026.
Source: Value Research
The table above shows that the long-term returns of Quant Small Cap Fund are also appealing. Over 5 years and 10 years, which is a sensible horizon to invest in small cap funds, the fund is among the top 5 on returns.
Risk Taken by Quant Small Cap Fund
| Risk Ratios | |||
| Std Dev (%) | Sharpe Ratio | Sortino Ratio | |
| Quant Small Cap Fund | 20.6 | 0.78 | 1.33 |
| Category Median | 19.7 | 0.68 | 1.02 |
| BSE 250 SmallCap – TRI | 22.0 | 0.59 | 0.92 |
The Risk Measures have been calculated using calendar month returns for the last three years and are as of 30 June 2026.
Source: Value Research
The fund has taken high risk (standard deviation of 20.6%) but has more than adequately compensated on a risk-adjusted basis considering the Sharpe and Sortino ratios. In fact, the Sortino Ratio (1.33) reveals that the downside risk is well managed while generating returns.
Can the appealing returns be sustained?
Given its active and agile approach, consciously intended to generate alpha (under its VLRT framework and dynamic momentum strategy), the fund is potentially expected to fare well over the long term.
Recognising that geopolitical risks persist, the fund is currently holding nearly 87% of its assets in equities and the rest, 13%, in non-equities, i.e. debt and cash, as per the June 2026 portfolio. In other words, the fund is aptly keeping its powder dry.
Top Holdings of Quant Small Cap Fund
Source: Fund Factsheet
Within equities, the fund currently has 99 stocks, of which the top 10 stocks account for 35.9%, making the portfolio well-diversified.
The portfolio valuation ratios—such as price-to-earnings (PE) and price-to-book (PB)—show that Quant Small Cap Fund generally trades at higher valuation multiples compared to its conservative or diversified peers like SBI, HDFC, Nippon India, and Axis Small Cap funds.
What should you, the investor, do?
After a sharp rally in smallcaps from the March 2026 bottom, the PE of the BSE 250 Small Cap Index is once again trading beyond the 5-year average. That said, it is not significantly high.
PE of the BSE 250 Small Cap Index
(Source: www.screener.in)
If you have a high-risk appetite and a time horizon of 7-10 years or more, you may consider Quant Small Cap Fund for your portfolio (or hold it if you already have it in your mutual fund portfolio).
With its active, unconstrained, and dynamic momentum strategy, the fund could reward you well.
Nevertheless, invest sensibly, making a thoughtful (not dominant) allocation.
Happy investing!
Note: We have relied on data from www.valueresearchonline.com, www.financialexpress.com, and the factsheets published by the respective fund houses throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
Returns data as of 24 July 2026. Direct Plan and Growth Option Considered. The Risk Measures have been calculated using calendar month returns for the last three years. The Risk Measures have been calculated using calendar month returns for the last three years and are as of 30 June 2026.
Standard Deviation is a measure of the total volatility of the fund. The Sharpe Ratio is a measure of risk-adjusted return that shows how much excess return an investment generates for each unit of risk taken.
Portfolio data as of 30 June 2026. The average of the price-to-book value ratios and price-to-equity ratios of all underlying stock holdings in proportion to their portfolio weights is considered.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Past returns are not indicative of future returns. Please consult your financial advisor before investing.
Rounaq Neroy has over 20 years of experience in the financial markets and investments. He is a close observer of the Indian economy and writes deeply on the capital markets, mutual funds, stocks, precious metals, asset allocation, wealth management, and investment strategy. His editorials provide interesting, actionable investment ideas to guide readers in the journey of wealth creation and make wise decisions. Rounaq was the Head of Content at PersonalFN (Quantum Information Services Pvt. Ltd.), which also owns Equitymaster.com – India’s oldest and trusted equity research house.
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