Buoyed by massive rally in smallcap and midcap stocks in the past about 3 years, small cap mutual funds have given investors stellar returns during the period. The overwhelming surge in the valuation of small and midcap stocks was seen as “froth” by market regulator SEBI, which cautioned investors against large inflows into these shares and also asked AMCs to protect investors’ interest.  

What is a small cap mutual fund?

Small-cap funds are those equity funds that invest in companies commanding market capitalisation of less than Rs 5,000 crore. While these companies deliver fantastic returns, they are incredibly volatile too. Here are top 10 smallcap funds that have delivered up to 36% returns over the last three years.

1. Quant Small Cap Fund (Direct)

The fund has yielded 35.86% annualised return in the last three years and 43% over the last 5 years. The fund is benchmarked against NIFTY Smallcap 250 – TRI.

2. Nippon India Small Cap Fund (Direct)

The smallcap fund has given investors 35% annualised returns over the last three years and 33.25% over the last 5 years.

3. Franklin India Smaller Companies Fund (Direct)

This Franklin fund has earned investors a 32.56% annualised return in 3 years and 26.5% return annualised in the last 5 years.  

4. HSBC Small Cap Fund (Direct)

The fund’s 3-year annualised return has been 32.41% and 5-year return is 28.06%.

5. Bandhan Small Cap Fund (Direct)

Bandhan Small Cap Fund (Direct) has yielded 30.71% annualised return in 3 years.

6. Tata Small Cap Fund (Direct)

Tata Small Cap Fund has earned 30.27% annualized return for investors in the last three years and 30.83% over 5 years.

7. Invesco India Smallcap Fund (Direct)

The fund has yielded a 29.59% annualised return over the last three years and 30.02% over the last 5 years.

8. HDFC Small Cap Fund- (Direct)

This HDFC fund has given investors a 29.47% annualised return in 3 years and 25.57% return in the last 5 years.

9. LIC MF Small Cap Fund (Direct)

LIC MF Small Cap Fund has earned investors 29.98% annualised return in the last three years and 27.03% in 5 years.

10. Canara Robeco Small Cap Fund (Direct)

The fund has grown by 28.81% on an annualised basis over the last three years and 31.16% in 5 years.

Investors must remember that historical performance doesn’t guarantee the repeat performance of any scheme. However, all the 10 mutual funds analysed in the story can boast of impressive track records. Nevertheless, investors must conduct comprehensive research and align investment objectives with risk tolerance. They are also advised to seek guidance from a financial advisor before investing.