Best Small Cap Mutual Funds - Top Small-Cap Funds to invest in 2025 (Page 1 )

FAQ's

What are small cap mutual funds?

Small Cap mutual funds invest a minimum of 65% of their portfolio in small cap companies. This includes companies with a market capitalization of less than 5000 Cr or the 251st company onwards, according to SEBI classification of market capitalization.

Who should invest in small cap mutual funds?

Only investors with a longer term time frame of more than 7 years should look to invest in Small cap mutual funds. Also, remember all your small-mid cap investment put together should not be more than 20-30% of your portfolio.

For details read, ‘How to achieve the right diversification in Mutual Funds?’

How MoneyWorks4Me helps you identify the right small cap mutual fund?

Once you login to your profile, MoneyWorks4me's Decision Maker provides you all the key info necessary to help you make an informed decision.

Funds that hold a reasonable proportion of good quality companies are colour coded Green, while those with a higher percentage of companies marked as "risky" are shown in RED. Similarly, funds with a good return consistency are indicated as Green, while those with poor return consistency are coded Red.

What are the best small cap mutual funds in 2022 ? (Based on past 5 year rolling returns)

Fund Name	Nav (Rs.)	AUM (Cr.)	Returns Since Inception	Past Returns	5 Yr Avg Rolling Returns	Quality	Performance
SBI Small Cap Fund	75.93	6,594	19.4	19.63	24.29	Risky	Very Good
Nippon India Small Cap Fund	54.76	10,637	17.8	17.63	22.94	Risky	Very Good
DSP Small Cap Fund	74.20	5,812	15.8	13.56	20.21	Risky	Very Good
Franklin India Smaller Companies Fund	64.50	6,216	13.2	11.79	17.02	Risky	Very Good
HDFC Small Cap Fund	51.34	9,069	13.6	15.88	15.65	Risky	Somewhat Good
Aditya Birla Sun Life Small Cap Fund	39.49	2,310	10.5	11.07	15.03	Risky	Very Good
Sundaram Small Cap Fund	99.79	1,208	15.5	9.44	14.05	Risky	Not Good
Kotak Small Cap Fund	110.56	2,539	16.2	17.65	13.93	Risky	Very Good
AXIS Small Cap Fund	42.08	3,632	22.1	17.38	13.60	Risky	Somewhat Good
ICICI Prudential Smallcap Fund	35.08	1,778	9.91	13.89	12.74	Risky	Not Good

Are investments in small cap mutual funds taxable?

Capital gains received within a one-year holding a mutual fund is known as short-term capital gains or STCG, which is taxed at a rate of 15 per cent. Long-term capital gains (LTCG), or a capital gains realised after a holding period of over a year, are exempt up to an amount of Rs 1 lakh. Over Rs 1 lakh, the gains will be taxed at 10 per cent.

Advantages and disadvantages of investing in small cap mutual funds

Advantages:

High Returns: Small cap companies have higher growth potential than their mid/large cap counterparts. High growth often translates to higher stock price appreciation.
Relatively Low Risk: Investing in small cap fund is a very good method to gain exposure to the space without taking on the risk of investing in individual stocks.
Professional help: Experienced fund managers managing your money further reduce the chances of you losing your hard earned money.

Disadvantages:

Volatility: Small cap funds come with a certain risk owing to its highly volatile nature. This is in contrast to large cap or multi cap funds that are relatively more stable.
Long periods of underperformance: Small cap stocks and thereby the funds that own them too are often plagued with long periods of underperformance.

Why choose MoneyWorks4Me?

MoneyWorks4me empowers retail investors to find the right Small Cap Mutual Fund best suited for your portfolio, all through its amazing free features. So register now at MoneyWorks4me.com

What are the Color-coded tags or buttons that accompany everyfund?

Every fund is assessed on the following:

Consistent Outperformers : Track record of having generated returns above a benchmark on a 3-year rolling basis. Consistent performers are Green, followed by Orange. Red have an inconsistent track record on outperforming the index.
The average 3-year rolling returns number appears in the first button.
Quality of Portfolio is assessed based on the quality of each stock held. Predominantly high quality stocks get a Green second button, followed by Orange and Red (large amount of risky stocks).
Upside Potential: Every fund is assessed on what returns it could deliver in the next 5 years based on it.

How do you select the fund for SIP?

Select the fund that is Green on Performance which shows it has consistently outperformed the index. Select one with a high average 3-year rolling returns - the number in the first button. And select one with a Green rating on Quality-the second button.

How do you find the best funds within a category?

Use the Funds Screener and select the category. It shows the funds with Green on Performance and Quality right on the top. The ones with the higher average 3-year rolling returns are ranked the highest. Funds with less than 5 years returns history are colored Grey on Performance. Since the track record is not for an adequately long period they feature lower in the list.

How do you build a portfolio with funds?

Build a well-diversified portfolio with funds that assures you of a stable growth through market and economic cycles and funds that enhance your portfolio returns over the long run.

Core Funds: Choose from Large cap, Large and Mid cap and Flexicap funds.
Booster Funds
1. Choose from Mid and Small cap funds.
2. Select a Sector or Thematic Fund that is likely to outperform in the long term.

How do you analyze your current fund portfolio?

Use the Fund Portfolio Analyzer, Sher-ya-Billi to check if your portfolio will deliver healthy returns or disappoint you. Go to Fund Portfolio Analyzer. You can also upload details of your funds in the Portfolio Manager and see the report on this page.

What must you be careful about when add a new fund to your existing portfolio?

When adding a new fund check how different is the fund compared to your portfolio by using the link in the Right allocation box on the Fund Decision Maker.

What are the main problems in a Fund Portfolio?

Most investors have more, many more funds that they should-over diversified. This tends to reduce returns. Many investors have more of the same i.e. they have funds that have very similar portfolios and hence the fund portfolio is not well-diversified. Either there are too many large cap dominated funds or far too many mid and small cap funds. What you require is a good, balanced mix. Finally investors don't know when to exit a fund and end up carrying it even though the future upside potential is very low.