Introduction
If you have a higher risk appetite and don’t mind being aggressive with your investment approach to get appealing returns, Small-cap Mutual Funds are for you. The Securities Exchange Board of India (SEBI) categorises these funds based on their market capitalisation, typically less than Rs.5,000 crores.
These companies are listed beyond the 250 mark on the stock exchanges. It is uncommon to hear about them. Despite them not being popular, they tend to have comparatively higher returns than Mid-Cap and Large-Cap Funds. However, they are highly volatile, which increases the risk level of investing in them. If you are considering them and want to find the best funds, go through this handy guide.
6 Best Small-Cap Mutual Funds in India for 2025
Some of the top small-cap mutual funds schemes based on their past financial performance are as follows:
1. Invesco India Small Cap Fund-Reg(G)
Taking care of the investment and wealth growth needs of diverse investors, Invesco Asset Management (India) Private Limited offers diverse Mutual Fund schemes and advised portfolios. You can consider the fund of this company controlling an asset base of over Rs.1,12,901.80 crores and benefit from quick returns through its small-cap fund. The NAV of this regular small-cap fund is Rs.40.44 with a fund size worth Rs.6,303.83 crores. Its yearly return rate is 27.73% and it requires a minimum SIP investment of Rs.500.
2. Motilal Oswal Small Cap Fund-Reg(G)
This small-cap fund leverages the multi-faceted operation of Motilal Oswal Financial Services Limited. With diverse businesses like retail broking, home finance, private equity, asset management, and more, the company synergically offers wealth management and growth solutions. Its steady growth can be capitalised with its small cap fund from the NAV of Rs.14.03 and a fund size worth Rs.4,084.27 crores. Its 1-year return rate as per the last updation is 40.3%. You can invest in the fund with a SIP amount of Rs.500.
UTI small cap fund leverages the growth of professionally managed AMC – UTI Mutual Fund. The company operates with the vision to provide long-term value to its stakeholders. Its investment excellence over the years has made it reach new heights. As of 31st March 2023, the company has managed a quarterly average AUM of Rs.2.39 lakhs. You can become a part of the growth and financial excellence this company offers with its small-cap fund. Its NAV is Rs.25.53 and the yearly return rate is 21.05%. You can invest in it through a minimum SIP amount of Rs.500.
3. DSP Small Cap Fund-Reg(G)
DSP Mutual Fund's small-cap lets you leverage the growing financial scope of DSP Mutual Fund Ltd. Throughout its operations exceeding 30 years, the company has focused on providing inclusive wealth management services to diverse customer segments. It has over Rs. 1,50,000 crores of assets under management and decades of experience. The current NAV of its small-cap fund is Rs. 189.06 and its fund size is worth Rs.16,633.53 crores. You can invest and benefit from its yearly return rate of 19.0% with a minimum SIP of Rs.100.
4. LIC MF Small Cap Fund(G)
With a journey spanning six decades, the Life Insurance Corporation of India (LIC) has almost developed and has almost become synonymous with life insurance. It has secured over 250 million lives. The company continues to enjoy a competitive presence in the Indian insurance market. Its small-cap general fund has an NAV of Rs.32.39. Its fund size comes up worth Rs.464.52 crores, while the yearly return rate is 30.58%.
5. Axis Small Cap Fund-Reg(G)
Axis Bank is one of the largest private-sector banks in India. it has established a stronghold with a spectrum of financial services to diverse customer segments. Having begun its operations in 1994, the bank is joined by various entities. Despite the merging, it continues to innovate with technological advancements and does not compromise on quality. You can gain favourable returns from its small-cap fund with an NAV of Rs.102.43. Its fund size is Rs.24,758.17 crores and its 1-year return rate comes down to 19.9%. You can invest in it with Rs.100 SIP amount.
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Note: The fund details for all small-cap mutual funds are as updated on 17th January 2025.
Conclusion
These top-ranking small-cap mutual funds offer you an excellent avenue to channel your high-risk appetite and earn potentially higher returns. As they focus on companies with smaller market capitalisation, growth potential can be optimally capitalised. While you consider these options, make sure to check the past performance of the companies to derive an informed decision. A well-researched approach can help you make the most of the high-growth opportunities they provide.
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