Top 5 Small Cap Mutual Funds in 2024

Small cap fund category has delivered 34.32 per cent return in one year with Bandhan Small Cap topping the list. When it comes to overall performance Quant and Nippon India lead the chart.
Small Cap Mutual Funds
Small Cap Mutual Funds

The small-cap mutual funds were the emergent stars in the market this year, giving a massive 34.32 per cent category average return. These funds invest in small-cap companies that are currently going through a huge growth stage albeit with higher risk. Unlike the more stable large-cap stocks, small-cap stocks can be far more volatile, Association of Mutual Funds in India (AMFI) says.

When Samvat 2080 began experts told Outlook Money that investors should keep a focus on small and mid-cap indices, that offers a more accurate representation of the Indian economy. Large-cap indices, heavily tilted by a handful of stocks, often fail to provide a true picture, they said.

Despite global challenges in 2023, the S&P BSE SmallCap index has surged by 40 per cent YTD, compared to the broader BSE Sensex, which saw a 13 per cent increase. This notable discrepancy could be a driving factor behind the substantial upsurge in contributions to small-cap mutual funds observed over the last two months.

AMFI data shows 23 small-cap funds, collectively boasting an average return of 34.32 per cent over one year and 35.26 per cent over three years. Although they gave 25.49  per cent in 5 years , a 2 per cent dip emerges over the 10 year tenure. Here are the top five performers ranked five to one.

List of Top 5 Small Cap Mutual Funds

1. Bandhan Small Cap Fund

With an impressive 44.34 per cent return, the highest return in last one year, Bandhan Small Cap Fund stands out for its stellar performance.

The fund was launched in February 2020 and so less than 4 years old. Maybe this is why the fund also has the highest return since launch in small cap category, which has many other funds, much older.

The returns since launch stands at a whopping 37.39 per cent.

As a new fund, it lacks a 5-year return figure, to demonstrate consistency but has a decent 3-year figure of 32.36 per cent but slightly below the category average for this tenure.

2. Franklin India Smaller Companies Fund

One of the largest funds in the category with an AUM of Rs 10,920 crore, Franklin India Smaller Companies Fund stands tall with the second highest 1 year return (44.17 per cent) and a commendable 10-year performance at 23.75 per cent.

This fund showcases consistency beating category average across all tenures except 5 year tenure. Its substantial AUM and high returns qualifies its position in the seasoned performer list considering, it is one among the two funds in this list older than 10 years.

3. HSBC Small Cap Fund

HSBC Small Cap Fund is among the top five performers in both one year and three year category, registering massive returns 40.62 per cent and 40.31 per cent, respectively.

The fund since its lauch has returned 23.21 per cent widely beating its benchmark return of 18.51 per cent during this tenure.

It is not a 10 year old fund but its sizable AUM (Rs 12,998.64 crore) underscores investor confidence. It has the second-highest AUM among top five performers.

4. Nippon India Small Cap Fund

Nippon India Small Cap Fund emerges as an all-rounder, synonymous with consistency.

It is the only fund in this list that beat the category returns in every format of the game. Except for the one year return it also featured in top five performers across all larger tenures.

With remarkable 3 and 5-year performances at 41.94 per cent and 28.66 per cent, respectively, and the highest AUM, a whopping Rs 41,173 crore fund, it should get the second place if not the first.

5. Quant Small Cap Fund

The performance of this fund is what can be called comprehensive excellence. Quant Small Cap Fund excels in its performance across all tenures except 10 years.

It boasts the highest in category, 45.75 per cent return over the last 3 years. It also hold the first place in 5 year returns with 32.50 per cent.

The fund is also among the top 5 performers in the 1-year bracket, with a commendable 40.89 per cent.  A fund over 10 years old, it slumped below the category average in 10-year returns.

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