+91-22-4891390910 Best Small Cap Mutual Funds 2026
Small caps are typically defined as firms with a market capitalization (MC=no of shares issued by the company X market price per share) of less than INR 500 Crore.
Small cap companies are young firms which have a great potential for sustainable growth in the long run. But, the risk of failure is higher with small caps compared to large and mid-cap companies.
Looking for Best Small Cap Mutual Funds? Well, small-cap funds are among one of the best wealth creation tools for long-term Financial goals. These financial goals may include child’s education, Retirement planning, etc. However, small-cap funds help to diversify portfolios and investors can take a small allocation (5-10%) in the overall Portfolio which can outperform over long investment period.
What are Small Cap Mutual Funds?
Small-caps are defined as "251st company onwards in terms of full market capitalization". As per norms, the portfolio of small-cap funds should have at least 65 percent of its total assets in small-cap stocks. Investors wanting to maximise their returns in the long-run, and who have a high-risk appetite, can plan their investments in small-cap funds. One should be able to tolerate Volatility of small-caps. These funds can rise the most in a bull market and can also suffer the steepest falls in a bear market. To gain optimal returns, an investor should at least invest for more than three-five years.
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Why Should you Invest in Small Cap Funds?
Some of the benefits of investing in a small-cap fund are:
- Small caps tend to be more flexible than the large caps. Smaller companies can adapt changes quicker than the larger companies, hence they can show explosive growth
- At times, Small cap funds tend to perform better than the Large cap funds, but their volatility can be much higher
- Since these are the companies at their early stage of development, they can grow rapidly
- Small cap stocks are priced lower than mid cap and large cap stocks
- With high risk comes the potential of making high returns
Fund Selection Methodology used to Find 10 Funds
Top and Best Small-Cap Funds to Consider 2026
Fund NAV Net Assets (Cr) Min SIP Investment 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2024 (%) Nippon India Small Cap Fund Growth ₹186.279
↑ 0.45 ₹78,957 100 7.9 19 10.9 14.7 18.9 -4.7 DSP Small Cap Fund Growth ₹232.678
↓ -0.66 ₹20,221 500 11.5 25.2 18.6 16.7 18.2 -2.8 IDBI Small Cap Fund Growth ₹35.8385
↑ 0.08 ₹758 500 13.3 31 18.7 17.8 17.8 -13.4 Sundaram Small Cap Fund Growth ₹299.329
↑ 1.38 ₹3,922 100 9 24.3 17 16.4 16.6 0.4 Franklin India Smaller Companies Fund Growth ₹180.632
↑ 0.67 ₹14,467 500 6.3 17.2 7.1 12.5 16 -8.4 HDFC Small Cap Fund Growth ₹139.832
↓ -0.36 ₹41,679 300 5.2 8.7 -1.5 9.9 14.6 -0.6 SBI Small Cap Fund Growth ₹187.587
↑ 0.21 ₹39,955 500 11.1 21.2 8.7 11.7 14.2 -4.9 ICICI Prudential Smallcap Fund Growth ₹91.98
↑ 0.37 ₹9,533 100 7.4 13.9 4.1 10.5 14 -0.4 Aditya Birla Sun Life Small Cap Fund Growth ₹101.636
↑ 0.04 ₹5,865 1,000 11.2 25.4 20.7 15 13.7 -3.7 Kotak Small Cap Fund Growth ₹276.409
↓ -0.77 ₹18,933 1,000 9 17.7 6 11.2 12.3 -9.1 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 4 Sep 26 Research Highlights & Commentary of 10 Funds showcased
Commentary Nippon India Small Cap Fund DSP Small Cap Fund IDBI Small Cap Fund Sundaram Small Cap Fund Franklin India Smaller Companies Fund HDFC Small Cap Fund SBI Small Cap Fund ICICI Prudential Smallcap Fund Aditya Birla Sun Life Small Cap Fund Kotak Small Cap Fund Point 1 Highest AUM (₹78,957 Cr). Upper mid AUM (₹20,221 Cr). Bottom quartile AUM (₹758 Cr). Bottom quartile AUM (₹3,922 Cr). Lower mid AUM (₹14,467 Cr). Top quartile AUM (₹41,679 Cr). Upper mid AUM (₹39,955 Cr). Lower mid AUM (₹9,533 Cr). Bottom quartile AUM (₹5,865 Cr). Upper mid AUM (₹18,933 Cr). Point 2 Established history (15+ yrs). Established history (19+ yrs). Established history (9+ yrs). Oldest track record among peers (21 yrs). Established history (20+ yrs). Established history (18+ yrs). Established history (17+ yrs). Established history (18+ yrs). Established history (19+ yrs). Established history (21+ yrs). Point 3 Rating: 4★ (upper mid). Rating: 4★ (upper mid). Not Rated. Rating: 3★ (lower mid). Rating: 4★ (upper mid). Rating: 4★ (lower mid). Top rated. Rating: 3★ (bottom quartile). Rating: 5★ (top quartile). Rating: 3★ (bottom quartile). Point 4 Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Risk profile: Moderately High. Point 5 5Y return: 18.85% (top quartile). 5Y return: 18.18% (top quartile). 5Y return: 17.81% (upper mid). 5Y return: 16.57% (upper mid). 5Y return: 16.01% (upper mid). 5Y return: 14.61% (lower mid). 5Y return: 14.17% (lower mid). 5Y return: 13.95% (bottom quartile). 5Y return: 13.67% (bottom quartile). 5Y return: 12.27% (bottom quartile). Point 6 3Y return: 14.73% (upper mid). 3Y return: 16.68% (top quartile). 3Y return: 17.82% (top quartile). 3Y return: 16.45% (upper mid). 3Y return: 12.47% (lower mid). 3Y return: 9.94% (bottom quartile). 3Y return: 11.66% (lower mid). 3Y return: 10.50% (bottom quartile). 3Y return: 14.98% (upper mid). 3Y return: 11.21% (bottom quartile). Point 7 1Y return: 10.89% (upper mid). 1Y return: 18.63% (upper mid). 1Y return: 18.68% (top quartile). 1Y return: 17.01% (upper mid). 1Y return: 7.12% (lower mid). 1Y return: -1.54% (bottom quartile). 1Y return: 8.71% (lower mid). 1Y return: 4.11% (bottom quartile). 1Y return: 20.71% (top quartile). 1Y return: 5.97% (bottom quartile). Point 8 Alpha: 0.80 (upper mid). Alpha: 0.00 (upper mid). Alpha: 4.12 (top quartile). Alpha: 5.33 (top quartile). Alpha: -2.93 (bottom quartile). Alpha: 0.00 (upper mid). Alpha: -1.22 (lower mid). Alpha: -2.98 (bottom quartile). Alpha: 0.00 (lower mid). Alpha: -3.12 (bottom quartile). Point 9 Sharpe: 0.12 (upper mid). Sharpe: 0.30 (upper mid). Sharpe: 0.26 (upper mid). Sharpe: 0.31 (top quartile). Sharpe: -0.05 (lower mid). Sharpe: -0.26 (bottom quartile). Sharpe: -0.04 (lower mid). Sharpe: -0.07 (bottom quartile). Sharpe: 0.40 (top quartile). Sharpe: -0.07 (bottom quartile). Point 10 Information ratio: -0.26 (lower mid). Information ratio: 0.00 (top quartile). Information ratio: -0.07 (upper mid). Information ratio: -0.05 (upper mid). Information ratio: -0.56 (lower mid). Information ratio: 0.00 (top quartile). Information ratio: -0.63 (bottom quartile). Information ratio: -0.79 (bottom quartile). Information ratio: 0.00 (upper mid). Information ratio: -0.80 (bottom quartile). Nippon India Small Cap Fund
DSP Small Cap Fund
IDBI Small Cap Fund
Sundaram Small Cap Fund
Franklin India Smaller Companies Fund
HDFC Small Cap Fund
SBI Small Cap Fund
ICICI Prudential Smallcap Fund
Aditya Birla Sun Life Small Cap Fund
Kotak Small Cap Fund
All the funds mentioned above are ideal, we are giving you detailed analysis of 5 funds.
The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of small cap companies and the secondary objective is to generate consistent returns by investing in debt and money market securities. Research Highlights for Nippon India Small Cap Fund Below is the key information for Nippon India Small Cap Fund Returns up to 1 year are on (Erstwhile DSP BlackRock Micro Cap Fund) The primary investment objective is to seek to generate long term capital appreciation from a portfolio that is substantially constituted of equity and equity related securities of small cap companies. From time to time, the fund manager will also seek participation in other equity and equity related securities to achieve optimal portfolio construction. There is no assurance that the investment objective of the Scheme will be realized Research Highlights for DSP Small Cap Fund Below is the key information for DSP Small Cap Fund Returns up to 1 year are on The Investment objective of the Scheme is to provide investors with the opportunities for long-term capital appreciation by investing predominantly in Equity and Equity related instruments of Small Cap companies. However
there can be no assurance that the investment objective under the Scheme will be realized. Research Highlights for IDBI Small Cap Fund Below is the key information for IDBI Small Cap Fund Returns up to 1 year are on (Erstwhile Sundaram SMILE Fund) To primarily achieve capital appreciation by
investing in diversified stocks that are
generally termed as small and mid-caps and
by investing in other equities. Research Highlights for Sundaram Small Cap Fund Below is the key information for Sundaram Small Cap Fund Returns up to 1 year are on The Fund seeks to provide long-term capital appreciation by investing in mid and small cap companies. Research Highlights for Franklin India Smaller Companies Fund Below is the key information for Franklin India Smaller Companies Fund Returns up to 1 year are on 1. Nippon India Small Cap Fund
Nippon India Small Cap Fund
Growth Launch Date 16 Sep 10 NAV (04 Sep 26) ₹186.279 ↑ 0.45 (0.24 %) Net Assets (Cr) ₹78,957 on 31 Jul 26 Category Equity - Small Cap AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately High Expense Ratio 1.44 Sharpe Ratio 0.12 Information Ratio -0.26 Alpha Ratio 0.8 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Years (1%),1 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for Nippon India Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Sep 26 Duration Returns 1 Month 2% 3 Month 7.9% 6 Month 19% 1 Year 10.9% 3 Year 14.7% 5 Year 18.9% 10 Year 15 Year Since launch 20.1% Historical performance (Yearly) on absolute basis
Year Returns 2024 -4.7% 2023 26.1% 2022 48.9% 2021 6.5% 2020 74.3% 2019 29.2% 2018 -2.5% 2017 -16.7% 2016 63% 2015 5.6% Fund Manager information for Nippon India Small Cap Fund
Name Since Tenure Data below for Nippon India Small Cap Fund as on 31 Jul 26
Equity Sector Allocation
Sector Value Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 2. DSP Small Cap Fund
DSP Small Cap Fund
Growth Launch Date 14 Jun 07 NAV (04 Sep 26) ₹232.678 ↓ -0.66 (-0.28 %) Net Assets (Cr) ₹20,221 on 31 Jul 26 Category Equity - Small Cap AMC DSP BlackRock Invmt Managers Pvt. Ltd. Rating ☆☆☆☆ Risk Moderately High Expense Ratio 1.72 Sharpe Ratio 0.3 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 500 Exit Load 0-12 Months (1%),12 Months and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for DSP Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Sep 26 Duration Returns 1 Month 4.5% 3 Month 11.5% 6 Month 25.2% 1 Year 18.6% 3 Year 16.7% 5 Year 18.2% 10 Year 15 Year Since launch 17.8% Historical performance (Yearly) on absolute basis
Year Returns 2024 -2.8% 2023 25.6% 2022 41.2% 2021 0.5% 2020 58.9% 2019 33.1% 2018 0.7% 2017 -25.5% 2016 42.8% 2015 12.7% Fund Manager information for DSP Small Cap Fund
Name Since Tenure Data below for DSP Small Cap Fund as on 31 Jul 26
Equity Sector Allocation
Sector Value Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 3. IDBI Small Cap Fund
IDBI Small Cap Fund
Growth Launch Date 21 Jun 17 NAV (04 Sep 26) ₹35.8385 ↑ 0.08 (0.23 %) Net Assets (Cr) ₹758 on 31 Jul 26 Category Equity - Small Cap AMC IDBI Asset Management Limited Rating Risk Moderately High Expense Ratio 2.3 Sharpe Ratio 0.26 Information Ratio -0.07 Alpha Ratio 4.12 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-12 Months (1%),12 Months and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for IDBI Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Sep 26 Duration Returns 1 Month 5.7% 3 Month 13.3% 6 Month 31% 1 Year 18.7% 3 Year 17.8% 5 Year 17.8% 10 Year 15 Year Since launch 14.9% Historical performance (Yearly) on absolute basis
Year Returns 2024 -13.4% 2023 40% 2022 33.4% 2021 2.4% 2020 64.7% 2019 19% 2018 -4.4% 2017 -15% 2016 2015 Fund Manager information for IDBI Small Cap Fund
Name Since Tenure Data below for IDBI Small Cap Fund as on 31 Jul 26
Equity Sector Allocation
Sector Value Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 4. Sundaram Small Cap Fund
Sundaram Small Cap Fund
Growth Launch Date 15 Feb 05 NAV (04 Sep 26) ₹299.329 ↑ 1.38 (0.46 %) Net Assets (Cr) ₹3,922 on 31 Jul 26 Category Equity - Small Cap AMC Sundaram Asset Management Company Ltd Rating ☆☆☆ Risk Moderately High Expense Ratio 1.94 Sharpe Ratio 0.31 Information Ratio -0.05 Alpha Ratio 5.33 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-12 Months (1%),12 Months and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for Sundaram Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Sep 26 Duration Returns 1 Month 2.2% 3 Month 9% 6 Month 24.3% 1 Year 17% 3 Year 16.4% 5 Year 16.6% 10 Year 15 Year Since launch 17.1% Historical performance (Yearly) on absolute basis
Year Returns 2024 0.4% 2023 19.1% 2022 45.3% 2021 -2.1% 2020 60.3% 2019 26.2% 2018 -6.1% 2017 -29.2% 2016 55.6% 2015 -0.1% Fund Manager information for Sundaram Small Cap Fund
Name Since Tenure Data below for Sundaram Small Cap Fund as on 31 Jul 26
Equity Sector Allocation
Sector Value Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity 5. Franklin India Smaller Companies Fund
Franklin India Smaller Companies Fund
Growth Launch Date 13 Jan 06 NAV (04 Sep 26) ₹180.632 ↑ 0.67 (0.37 %) Net Assets (Cr) ₹14,467 on 31 Jul 26 Category Equity - Small Cap AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd Rating ☆☆☆☆ Risk Moderately High Expense Ratio 1.72 Sharpe Ratio -0.05 Information Ratio -0.56 Alpha Ratio -2.93 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-1 Years (1%),1 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value Returns for Franklin India Smaller Companies Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 4 Sep 26 Duration Returns 1 Month 0.9% 3 Month 6.3% 6 Month 17.2% 1 Year 7.1% 3 Year 12.5% 5 Year 16% 10 Year 15 Year Since launch 15.1% Historical performance (Yearly) on absolute basis
Year Returns 2024 -8.4% 2023 23.2% 2022 52.1% 2021 3.6% 2020 56.4% 2019 18.7% 2018 -5% 2017 -17.4% 2016 43.5% 2015 10.2% Fund Manager information for Franklin India Smaller Companies Fund
Name Since Tenure Data below for Franklin India Smaller Companies Fund as on 31 Jul 26
Equity Sector Allocation
Sector Value Asset Allocation
Asset Class Value Top Securities Holdings / Portfolio
Name Holding Value Quantity
Who Should Invest in Small Cap Mutual Funds?
As small-cap funds invest in small-cap stocks and small companies like startups, they have a huge potential for future growth. But, the matter of fact is that the returns of small caps are subjected to high volatility. Thus, some of the small-cap stocks can erode your wealth. However, on the other side, small caps can also double your investments in the future.
Due to the nature of the companies, small caps can outperform in a rising market and even can underperform during a downturn. Hence, investors who can bear a high level of risk in their investment should only consider Investing in small cap funds. You should be able to bear downfalls in bad market phase. If you are planning to invest in such high-risk funds, it is suggested to plan your investments for a longer duration, i.e., approximately for more than five years. The longer you invest in the equity market, higher are the chances to earn good profits.
How to Invest in Small Cap Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
Tips to Invest in Best Small Cap Equity Funds
When planning to invest in small-cap funds, here are some of the important parameters that you need to take into account before jumping into investing.
Evaluate past performances
Ideally, whenever you are planning to invest in a Mutual Fund scheme, you should thoroughly evaluate the past performances of the fund. Take returns of the past five years and try to compare it with other good funds. A fund should be consistent in its performances in all market conditions. Also, check if the fund is able to beat its benchmark or not.
The scheme should belong to a quality fund house
It is always suggested to look at the quality & reputation of the fund house that you wish to invest in. A fund house with a long-standing record, large assets under management, star funds or good performing fund, etc., is the one to invest in. The fund house that has a strong presence in the financial industry with a consistent track record should be ideally preferred.
Check the experience of the fund manager
The credit of performance of a Mutual Fund scheme lies with the fund manager. A fund manager is responsible for making investment decisions for the fund’s portfolio. So, investors should go through the performance of the funds managed by the particular fund manager, especially during the tough market phases. The fund manager Going for a fund manager who has been consistent over his career is a preferred choice.
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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Good n nice
I believe SBI small cap fund is the best to get good returns in long run.