Top Small Cap Mutual Funds – List of Smallcap Funds in NSE (2025)
Small cap mutual funds are a category of mutual funds that focus on investing in the stocks of small-cap companies. If you’re looking for investment options that offer the potential for high returns and are willing to embrace a degree of risk, small-cap funds might be an intriguing prospect. Therefore, let’s explore small-cap mutual funds, their benefits and risks, and how you can fit them into your investment portfolio. Let us begin by learning more about the top 10 small-cap mutual funds in India and the meaning of small cap funds
Top 10 Small Cap Mutual Funds Sorted by 5Y CAGR
| Smallcap Funds | AUM (Rs. in cr.) | CAGR 3Y (%) | Expense Ratio (%) | CAGR 5Y (%) |
|---|---|---|---|---|
| Quant Small Cap Fund | 29,462.70 | 24.16 | 0.72 | 37.04 |
| Nippon India Small Cap Fund | 65,922.00 | 23.04 | 0.64 | 33.90 |
| Bandhan Small Cap Fund | 14,062.19 | 29.77 | 0.4 | 33.17 |
| Tata Small Cap Fund | 11,576.03 | 22.51 | 0.33 | 32.28 |
| Invesco India Smallcap Fund | 7,580.46 | 25.72 | 0.4 | 32.08 |
| HDFC Small Cap Fund | 36,353.10 | 23.36 | 0.71 | 31.90 |
| HSBC Small Cap Fund | 15,885.78 | 19.57 | 0.64 | 31.73 |
| Edelweiss Small Cap Fund | 4,979.92 | 20.78 | 0.43 | 31.44 |
| Franklin India Small Cap Fund | 13,824.99 | 22.44 | 0.9 | 30.83 |
| Bank of India Small Cap Fund | 1,937.49 | 20.61 | 0.51 | 30.77 |
Note: The data on the list is from 8th September 2025. This data is derived from the Tickertape Mutual Funds Screener, using the following filters:
- Plan: Growth
- Category: Small Cap
- CAGR 3Y: High
- CAGR 5Y: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of Top Small Cap Funds in India
Quant Small Cap Fund
Quant Small Cap Fund is an equity-oriented scheme that invests primarily in small-cap companies with high growth potential. The fund follows a dynamic and aggressive investment strategy, aiming to capitalise on emerging business opportunities while accepting higher volatility compared to large-cap funds.
Nippon India Small Cap Fund
Nippon India Small Cap Fund is a diversified equity fund focusing on small-cap stocks with strong fundamentals and growth prospects. It aims to capture opportunities in emerging companies across sectors, offering long-term wealth creation potential but with higher market-linked risk.
Bandhan Small Cap Fund
Bandhan Small Cap Fund is an equity scheme investing predominantly in small-cap businesses with scalable models and growth potential. It maintains a diversified portfolio across sectors and focuses on early-stage opportunities while carrying a high-risk, high-reward profile.
Tata Small Cap Fund
Tata Small Cap Fund invests mainly in small-cap companies with innovative business models and the potential for sustainable earnings growth. It seeks to deliver long-term capital appreciation by capturing opportunities in emerging segments of the market.
Invesco India Smallcap Fund
Invesco India Smallcap Fund is an equity mutual fund that targets small-cap companies with high-quality management and scalable business prospects. It focuses on bottom-up stock selection to build a diversified portfolio, aiming for long-term growth despite increased volatility.
HDFC Small Cap Fund
HDFC Small Cap Fund is a small-cap equity scheme investing in high-potential smaller companies across industries. It aims to generate long-term capital appreciation by identifying undervalued opportunities while accepting the higher risks associated with small-cap investing.
HSBC Small Cap Fund
HSBC Small Cap Fund is an equity fund that focuses on small-cap companies with promising growth potential. It seeks to deliver long-term wealth creation through a research-driven, bottom-up stock selection strategy, while maintaining a high-risk exposure due to market volatility.
Edelweiss Small Cap Fund
Edelweiss Small Cap Fund is an actively managed equity scheme investing in small-cap stocks across sectors. It focuses on companies with innovative business models and strong fundamentals, aiming for capital growth while accepting the higher risk-reward dynamics of small-cap markets.
Franklin India Small Cap Fund
Franklin India Small Cap Fund is an equity scheme that invests primarily in small-cap businesses with scalable operations and growth potential. It adopts a research-based approach to identify companies early in their growth cycle, aiming for long-term capital appreciation.
Bank of India Small Cap Fund
Bank of India Small Cap Fund is a small-cap equity mutual fund focusing on emerging companies with strong fundamentals and scalability prospects. It seeks to generate long-term wealth by tapping into early-stage growth opportunities, while carrying a high-risk profile inherent to small-cap investing.
What are Small Cap Mutual Funds?
Small cap mutual funds are equity-oriented schemes that invest primarily in companies ranked 251 and beyond by full market capitalisation, as defined by SEBI, within the Nifty 500 universe. These funds focus on emerging businesses with significant growth potential, often operating in niche sectors or expanding industries. While they can deliver higher returns due to early-stage growth opportunities, they also involve greater risk and volatility compared to large-cap and mid-cap funds. Their performance depends on company fundamentals, economic conditions, and broader market cycles.
How to Invest in Small Cap Mutual Funds?
You can easily invest in small cap mutual funds for long-term or short-term by following these steps:
- To invest in the best mutual funds in India, you can visit an online investment platform such as smallcase or Tickertape.
- The next step would be to research the mutual fund performance and identify the best small cap funds which aligns with your investment thesis. You can select and learn more about the best small cap funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list of the small cap mutual funds to conduct a small cap mutual fund comparison and analysis.
- Once you have selected the funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade model portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered investment experts (also known as smallcase managers)
- smallcase offers over 500+ stock portfolios, created by 200+ managers
Here are a few popular smallcases among new investors:
Disclosures for aforementioned smallcases
Features of Small Cap Mutual Funds
Here are the features of the best small cap mutual funds.
- High Return Potential: However, small cap companies are also more volatile and riskier than large-cap companies. Investors looking for options like the best small cap mutual fund or high return small cap mutual funds should consider these factors carefully.
- Investment Horizon: Small cap companies need time to grow and mature, making them a viable choice for those seeking the best performing small cap funds 2025 or high return mutual funds in the small cap category.
- Diversification: They invest in a variety of small cap companies from different sectors, which can also include funds such as the India small cap fund direct growth or small cap fund direct growth options.
- Liquidity: The list of small cap mutual funds in India are generally liquid, meaning you can redeem your units at any time. However, there may be some restrictions on redemption during market volatility, which is important for those considering small cap fund SIP plans or a lumosum investment in one.
Who Can Explore Small Cap Mutual Funds?
Smallcap funds can be suitable for the following range of investors:
- Have a High Risk Tolerance: Smallcap funds can be more volatile, making them ideal for those comfortable with higher investment risks.
- Have a Long-Term Investment Horizon: These funds can be the best for investors with a long-term perspective, allowing them to ride out market ups and downs.
- Seek High Growth Potential: Individuals looking for the potential of significant capital appreciation may benefit from small cap mutual funds.
- Value Diversification: Investors who wish to diversify their portfolios and reduce concentration in larger companies can consider small-cap investments.
Taxation on Smallcap Mutual Funds as per the Union Budget 2024-25
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Benefits of Investing in the Best Small Cap Mutual Funds
Investing in the best Small Cap Mutual Funds list offers several advantages:
- High Growth Potential: Small-cap equity funds, including tax-saving small cap funds, can provide substantial growth opportunities, potentially outperforming larger companies in the long run.
- Diversification: These funds help in portfolio diversification, spreading risk across a range of small-cap companies.
- Market Efficiency: Smaller companies may be less followed by analysts, allowing for information-based advantages.
- Higher Returns: Historically, small-cap equity funds have shown the potential for higher returns, although they come with increased volatility. Investors must keep in mind that mutual fund returns cannot be guaranteed.
Risks Involved While Investing in Small Cap Funds
While finding the top 5 small cap fund, you must be aware of the associated challenges and conduct a small cap fund risk analysis accordingly.
- High Volatility: Small cap stocks are typically more volatile than large cap stocks, meaning their prices can fluctuate more sharply. This can make the top small cap funds riskier for investors who cannot tolerate large swings in their portfolio value.
- Low Liquidity: Small cap stocks are generally less liquid than large cap stocks, meaning it can be more difficult to buy and sell them. This can be a problem for investors who need to access their cash quickly.
- Higher Risk of Failure: Small cap companies are more likely to fail than large cap companies. This is because they have less financial resources and are more vulnerable to economic downturns.
- Concentration Risk: Small cap funds typically invest in a smaller number of companies than large cap funds. This means that if one of the companies in the portfolio fails, it can have a significant impact on the fund’s performance.
Factors to Consider Before Investing in Small Cap Funds
Before investing in the best small cap mutual funds, there are a few factors that you should consider:
- Risk: Small cap funds are riskier because small cap companies are more volatile and have a higher chance of failure. It’s worth evaluating whether you should opt for options like the best small cap mutual funds or best smallcap funds in India.
- Return Potential: The top small cap funds have the potential to deliver higher returns than large cap and mid cap funds. However, it is important to remember that past performance of small cap funds is not indicative of future results, even for the top 5 small cap mutual funds or best smallcap funds in India.
- Investment Horizon: Small cap funds are best suited for investors with a long-term investment horizon (5 years or more). This is because small cap companies need time to grow and mature, making options like the top small cap fund or best small cap SIP suitable choices for long-term growth.
- Fund Manager’s Track Record: It is important to choose a small cap fund with a fund manager who has a good track record. Funds such as the best small cap mutual funds or best small cap funds often highlight this as a key criterion for success.
- Expense Ratio: A lower expense ratio will leave you with more money in your pocket, making options like the best small cap fund or high return small cap mutual funds appealing for cost-conscious investors.
To Wrap It Up…
In conclusion, small cap mutual funds are some of best mutual funds for sip and present an exciting opportunity for investors seeking high growth potential in their portfolios. While these funds come with higher volatility and risks, they can be rewarding over the long term. However, diversifying through small cap MF can enhance a well-rounded small cap fund investment strategy.
Looking for a Loan Against Mutual Funds (LAMF)? Explore LAMF on smallcase –
You can now apply for a loan against mutual funds (LAMF) on smallcase. Explore the quick and paperless process with the following articles about the eligibility criteria, documents required, features, benefits and more on LAMF at smallcase!
Frequently Asked Questions (FAQs) on Best Small Cap Mutual Funds
Here are some of the top 5 mutual funds in India in the small cap category, sorted according to their 5Y CAGR
– Quant Small Cap Fund
– Nippon India Small Cap Fund
– Bandhan Small Cap Fund
– Tata Small Cap Fund
– Invesco India Smallcap Fund
Note: The data on this list is as of 8th September 2025. This information is for educational purposes and is not recommendatory in nature.
Small-cap companies have a lower market capitalisation compared to mid-cap and large-cap companies, which is less than Rs. 5,000 cr.
The returns on small mutual funds have been historically positive, but as small cap companies are high-risk, high-reward investments, their returns depend on market fluctuations and there is no guarantee that a small-cap fund will earn more returns than any other type of fund.
Small-cap investment funds are exposed to higher volatility, liquidity risks, and market fluctuations due to the relatively smaller size of their underlying companies. These funds may experience sharper price swings, making them riskier than mid-cap or large-cap funds.
There isn’t a fixed time considered ideal for investing in small-cap investment funds. Market conditions, valuations, and economic factors often influence opportunities, but outcomes remain uncertain. Investors typically evaluate personal goals and risks before deciding.
