Bank of India vs JM Financial: 2 equity funds with over 30% returns in just 3 months; which one looks better for 2026?

Their strong performance came as small-cap stocks staged a sharp rebound after nearly 20 months of consolidation. Many small-cap companies gained from sector-specific tailwinds, government spending initiatives, healthy corporate earnings, and strong domestic inflows, according to Equitree Capital.

That said, investors should not ignore the risks. Small-cap funds are among the most volatile categories in the mutual fund space, as they carry high volatility as prices swing dramatically during market corrections. Since small-cap funds invest in smaller, emerging companies, they are extremely vulnerable to economic downturns, inflation, and rising interest rates.

Here’s a closer look at the two top-performing funds, their portfolios, risk profiles, and how they fared against their respective benchmarks.

Best small-cap funds in the last 3 months

If you had invested in Bank of India Small Cap Fund – Direct Plan three months ago, your investment would have grown by an impressive 30.95%, making it one of the best-performing small-cap funds during the period. The scheme comfortably outpaced both its benchmark return of 21.19% and the category average return of 21.26%.

JM Small Cap Fund – Direct Plan was another standout performer, delivering a remarkable 30.25% return in just 90 days. The scheme significantly outperformed its benchmark, which returned 21.19%, as well as the category average of 21.26%. 

These two schemes emerged as the top performers in the small-cap category over the last three months, delivering returns of more than 30% when the category itself generated around 21%. 

Small-cap funds battle: Bank of India Vs JM Financial – returns across short and long time-frames

Here’s a comparison of how these two small-cap funds have fared across short- and long-term horizons.

Bank of India Small Cap Fund – Direct Plan

This fund has been rated 4-star by Value Research and was launched on December 19, 2018. This small-cap fund is currently managed by Alok Singh and Nav Bhardwaj. 

The fund has delivered a mean return of 23.61%, significantly higher than both its benchmark BSE 250 SmallCap TRI (19.66%) and the small-cap category average (20.24%). 

This indicates that the fund has generated superior average returns compared to its peers and benchmark over the last 3-year period.

Top 10 holdings: Wockhardt, Sky Gold And Diamonds, Acutaas Chemicals, Lloyds Metals, Quality Power Electrical Equipments, CAMS, City Union Bank, Arvind, Cemindia Projects, and Krishna Institute.

Top 5 sector-wise holdings: Industrials, Consumer Discretionary, Financial, Healthcare, and Materials.

Expense ratio: 0.48% (As on 31-May-2026)

Risk profile: The fund’s 21.88% standard deviation is marginally lower than the benchmark’s 22.19%, but slightly higher than the category average of 20.38%, indicating that this small-cap fund is moderately aggressive.

The Sortino Ratio of 1.21 exceeds both the benchmark’s 0.98 and the category average’s 1.05, suggesting that the fund has managed downside risk more efficiently while delivering higher returns. The fund’s Beta of 0.94 is slightly above the category average of 0.90, but remains below 1, which indicates that the fund has historically been marginally less volatile than the broader market.

One of the fund’s strongest metrics is its Alpha of 4.77%, substantially higher than the category average of 2.02%, indicating strong stock selection and portfolio management by the fund managers.

JM Small Cap Fund – Direct Plan

Satish Ramanathan, Asit Bhandarkar, and Deepak Gupta are currently managing this mutual fund, which was introduced on June 18, 2024. 

The fund’s asset allocation comprises 99.14% in equity and 0.86% in CCE.

Top 10 holdings: Garware Hi-Tech, Acutaas Chemicals, Godfrey Phillips, TD Power Systems, Shaily Eng Plastics, Jana SF Bank, Navin Fluorine, Onesource Specialty Pharma, Restaurant King, and J&K Bank.

Top 5 sector-wise holdings: Industrials, Consumer Discretionary, Financial, Materials, and Healthcare.

Expense ratio: 0.68% (As on 31-May-2026)

Risk profile: The JM Small Cap Fund is classified as a Very High Risk scheme by Value Research. The fund was launched on June 18, 2024, making it a relatively new entrant in the small-cap category. Since it does not yet have a sufficiently long performance history, key risk-adjusted metrics such as Mean Return, Standard Deviation, Sharpe Ratio, Sortino Ratio, Beta, and Alpha are currently unavailable.

Word of caution

While small-cap funds have the potential to generate exceptional returns, they are also among the most volatile equity mutual fund categories. 

The returns delivered by the above two schemes may not be sustainable over the long term, and past performance does not guarantee future results.

Small-cap stocks are generally more sensitive to economic slowdowns, market corrections, and during periods of market stress, these funds can experience sharper declines than large-cap or diversified equity funds.

Before investing, ensure that your risk appetite, investment horizon, and financial goals align with the high-risk nature of the category. 

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.

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