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News18
4 days ago
- Business
- News18
Best-Performing Mutual Funds In 5 Years: Top 10 Small-Cap Funds With Annualised Returns Up To 35%
Nippon India Small Cap Fund and Bandhan Small Cap Fund were the best-performing funds in the category among the top 10 schemes. Mutual fund schemes have become popular among investors in the last few years due to higher returns compared to traditional investment instruments. Mutual funds offer market-linked returns and enormous flexibility to investors from income groups. Among the wide range of schemes, small-cap mutual funds have given significant returns to investors over the last five years, despite the bouts of market volatility. Small-cap funds are the mutual fund schemes that invest at least 65% of their total assets in equity and equity-related securities of small-cap companies, as per the classification by the market regulator, the SEBI (Securities and Exchange Board of India). These schemes are generally preferred by investors looking for exposure to equity assets with high growth potential. The small-cap funds come with the potential to outperform mid- and large-cap funds in an upward market. However, these funds could be volatile and risky as they invest the majority of their assets in small companies. Investors can identify the best mutual fund schemes by evaluating returns over a period and comparing them with returns of other schemes in the same category. Past returns may not be a guarantee of steady growth due to future uncertainties and market fluctuations. However, in mutual fund schemes, past returns help to assess the performance and the future growth potential. Before finalising to invest in a mutual fund scheme, it's advisable to evaluate your financial goals, risk appetite and investment horizon. Here are the top 10 small-cap mutual funds that have delivered an annualised return of 30-35 per cent in the last five years, according to the Association of Mutual Funds in India (AMFI). Small Cap Fund 5-Year Annualised Return (In %) Nippon India Small Cap Fund 34.71 Bandhan Small Cap Fund 32.98 HSBC Small Cap Fund 32.14 HDFC Small Cap Fund 31.90 Invesco India Small Cap Fund 31.87 Franklin India Small Cap Fund 31.61 Tata Small Cap Fund 31.59 BOI Small Cap Fund 30.69 Edelweiss Small Cap Fund 30.54 ICICI P Small Cap Fund 30.28 As the table indicates, the Nippon India Small Cap Fund has become the best-performing fund in the category with an annualised return of 34.71 percent. Bandhan Small Cap Fund (32.98) and HSBC Small Cap Fund (32.14) have become the second and third best-performing small-cap funds, respectively, over the last five years. BOI Small Cap Fund (30.69), Edelweiss Small Cap Fund (30.54), Franklin India Small Cap Fund (31.61), HDFC Small Cap Fund (31.9), ICICI P Small Cap Fund (30.28), Invesco India Small Cap Fund (31.87) and Tata Small Cap Fund (31.59) are some of the other small-cap schemes that have delivered annualised returns above 30 per cent over the last five-year period. However, as suggested by market experts, investors must remain cautious before investing in a small-cap fund based on its historical returns. It will be a prudent step to evaluate the future growth potential of a small-cap scheme with respect to current economic and market conditions. Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates—only on News18. Also Download the News18 App to stay updated! view comments Location : Delhi, India, India First Published: August 11, 2025, 18:59 IST News business Best-Performing Mutual Funds In 5 Years: Top 10 Small-Cap Funds With Annualised Returns Up To 35% Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Mint
08-08-2025
- Business
- Mint
Best mutual funds: These small-cap funds delivered over 30% annualised returns in past 5 years. Check list
Best mutual funds: When investing in a mutual fund scheme, investors often examine the scheme's returns and compare them with those of other schemes in the same category. Although past returns may not continue in the future, investors often base their investment decisions on how a scheme has performed in the past. Here, we list the past performance of the 10 best-performing small-cap mutual funds, which have delivered an annualised return of 30 per cent. To put this perspective, an annual return of 30 per cent means that if someone invests ₹ 1 lakh, this growth rate would allow the investment to become ₹ 3,71,293 after five years. Small-cap mutual funds refer to schemes that have invested 65 per cent of their assets in small-cap stocks and the remaining assets in mid-cap or large-cap stocks. As of 30 June 2025, there were 30 small-cap schemes with a total assets under management (AUM) of ₹ 3,54,550 crore. Small Cap fund 5-year-return (%) Bandhan Small Cap Fund 32.98 BOI Small Cap Fund 30.69 Edelweiss Small Cap Fund 30.54 Franklin India Small Cap Fund 31.61 HDFC Small Cap Fund 31.90 HSBC Small Cap Fund 32.14 ICICI P Small Cap Fund 30.28 Invesco India Small Cap Fund 31.87 Nippon India Small Cap Fund 34.71 Tata Small Cap Fund 31.59 As the table above shows, Bandhan Small Cap Fund delivered around 33 per cent annualised return, and HSBC Small Cap Fund gave 32.14 per cent annualised return. Other schemes that gave high returns (above 30 per cent per annum) include the Bank of India Small Cap Fund, Edelweiss SCF, Tata Small Cap Fund and Nippon India Small Cap Fund. Meanwhile, retail investors must be aware that past returns do not guarantee future returns. Just because some scheme has delivered good returns in the past does not mean it will continue to perform well in the future as well. Conversely, bad performance in the past does not imply similar performance in the near future. Additionally, investors can also examine the stress test of small-cap mutual fund schemes before investing in them. The stress test shows the number of days it would take to liquidate 25 per cent and 50 per cent of the portfolio in case of a stress event. Per Sebi guidelines, mutual funds are supposed to examine the liquidity of portfolios under stress scenarios for their mid-cap and small-cap funds. Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision. For all personal finance updates, visit here
Economic Times
07-05-2025
- Business
- Economic Times
Are smallcap mutual funds losing shine? Returns dip sharply up to 18% in 2025
Small cap mutual funds experienced a significant downturn in 2025, with returns dipping sharply, some funds losing up to 18%. This underperformance is attributed to stretched valuations, global uncertainties, and domestic elections. Despite recent losses, experts suggest long-term investors may still benefit, viewing corrections as potential buying opportunities, especially given the superior earnings growth potential of small caps. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Smallcap mutual funds have offered a negative return of up to 18% in 2025 so far and on an average have lost 11.72% in the same period. There were around 29 small cap funds in the current calendar year so of 29 funds in the category, 22 funds lost in double-digits. LIC MF Small Cap Fund lost the most at around 17.75% in the current calendar year so far, followed by HSBC Small Cap Fund which lost 16.45% in the same period. Motilal Oswal Small Cap Fund delivered a negative return of 15.16% in 2025 so Small Cap Fund has lost 12.83% in the same time period. Nippon India Small Cap Fund , the largest small cap fund based on assets managed, gave a negative return of 10.85% in the mentioned time period. Quant Small Cap Fund lost the lowest of around 7.72% in the said time market experts attribute this underperformance to stretched valuations and uncertainties around global interest rates, geopolitical developments, and domestic elections added to the overall volatility.'In 2025, small cap funds in India witnessed a sharp correction following a period of strong performance. One of the primary reasons was stretched valuations—price-to-earnings ratios had moved well above historical averages, comparable to levels seen during 2007–08. This led to profit booking as investors who had seen high returns in 2023 and 2024 began exiting their positions. Regulatory bodies like SEBI and AMFI also issued cautionary statements regarding froth in the small cap space, prompting some fund houses to pause or limit new investments,' said Chakravarthy V, co-founder and Executive Director of Prime Wealth FinservAnother expert shares the performance of small cap funds over a longer period and explains that this stellar performance was backed by superior earning growth of small caps.'After a stellar run of four years, which saw huge performance by small caps, it is not surprising to see a correction and consolidation in terms of time and price for the small cap stocks. The run of the last five years has been backed by superior earnings growth of small caps and we expect small cap earnings growth to continue to be better than that of last caps in the next two years,' said Mihir Vora, CIO of Trust Mutual Fund The small cap funds are benchmarked against Nifty Smallcap 250 - TRI and BSE 250 Small Cap - TRI which went down by 12.44% and respectively in the current calendar year so an average these benchmarks lost 11.69% in the same time period, denoting a marginal outperformance against funds average small cap funds offering negative returns up to 18%, the experts believe that the concern among the small cap investors depends on multiple factors such as the investor's entry point, time horizon, and risk V said that, 'Those with a recent entry may see negative returns, while others with longer holding periods may view the correction differently. The situation highlights the cyclical nature of small caps, where sharp rallies are often followed by equally sharp corrections. The impact of such events varies depending on the individual investment context and goals.'On the other hand, Vora of Trust Mutual Fund says that the great part about small caps is that there is a wide variety and large number of stocks to choose from and there are over 800 stocks in this small cap space out of which over 500 are in segments that we consider as high growth segments. 'So an investor, looking to invest in segments with superior growth will naturally have to veer towards small caps for stock picking,' he further analysed the data of small cap funds in previous calendar years. The deep dive in the data showed that since calendar year 2022, out of 24 small caps, 13 funds have not offered negative returns in the calendar year 2022, 2023, and other small caps have offered negative returns in 2022 only and delivered gains in 2023 and 2024. The schemes that have offered positive returns in all the last three calendar years includes Axis Small Cap Fund, Canara Robeco Small Cap Fund, DSP Small Cap Fund, Edelweiss Small Cap Fund, HDFC Small Cap Fund, Nippon India Small Cap Fund, Quant Small Cap Fund, and SBI Small Cap cap funds gave a marginal loss in 2022 and gave gains in 2023 and 2024 raising a concern that whether small cap investors are still making money or not? While addressing this concern, Chakravarthy V said that investor outcomes in small caps have varied based on timing as those who started investing before 2022, particularly through systematic plans, may still be in profit due to the gains accumulated during the multi-year rally.'On the other hand, investors who entered in late 2024 or early 2025 are more likely experiencing negative returns due to the recent correction. This divergence illustrates how the timing of investment plays a significant role in performance,' he 250 Small Cap - TRI had been in the red since the last nine months. In the last nine months, the index went down by 6.57% whereas in the last six months it dropped by 10.46%. In the last three months, it lost 1.29%.The other index - Nifty Smallcap 250 - TRI went down 7.98% in the last nine months and dropped by 12.09% in the last six months. In the last three months, this index went down by 3.51%.Commenting on whether investors should use this correction as an opportunity to buy more or should stay cautious, Chakravarthy adds that some market participants view corrections as opportunities, especially when valuations become more reasonable after a steep run-up whereas others interpret the same period as one requiring caution due to elevated volatility and inherent risks in the small cap space.'The segment's nature tends to involve higher price swings, making it sensitive to both market sentiment and liquidity. Whether the current moment is seen as an entry point or a phase of uncertainty depends largely on individual perspectives, investment strategies, and tolerance for volatility,' he CIO of Trust Mutual Fund commented on the earnings and valuations and said that the overall, small caps offer superior earnings growth compared to large caps and the valuations in terms of PE ratio is similar and hence the growth adjusted valuation of small caps is quite all the debates that were going on related to SIP in small caps, the category received a drop in inflows in February but again saw a surge in to the last available data by Association of Mutual Funds in India (AMFI), small cap funds saw a surge of 10% in inflows on monthly basis receiving a total inflow of Rs 4,092 crore in March against an inflow of Rs 3,722 the category that gained investors' interest in March again, Vora of Trust Mutual Fund comments that given the correction that has already happened, we are not worried about small cap performance going forward and investors with an equity investment horizon of three years or more can consider small caps as an cap schemes invest in very small companies or their stocks. That is why investing in small cap stocks is considered extremely risky. The small cap segment can be extremely volatile in the short term, but they have the potential to offer very high returns over a long period. Small cap schemes are recommended only to aggressive investors with a high-risk appetite and long investment horizon, say, around seven to 10 years. ETMutualFunds do not recommend small cap schemes to new and inexperienced should always consider their risk appetite, investment horizon and goals before making any investment decision.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and twitter handle
