10 Best Small Cap Mutual Funds in India (2024)

Investing in small cap mutual funds can be a smart move for those looking to diversify their portfolio and achieve higher returns. small cap funds invest in companies with smaller market capitalizations, which often have significant growth potential. However, they also come with higher risks.

Let’s understand small cap funds better before we dive into the top small cap mutual funds for this year. 

What are Small Cap Mutual Funds?

small cap funds are mutual funds that invest primarily in stocks of small capitalization companies. These companies have a market capitalization between Rs 500 crore and Rs 5,000 crore. small cap companies are often in the early stages of growth, offering significant potential for high returns. 

However, they also come with higher risks due to market volatility and less established business models. small cap funds are more suitable for investors with a higher risk tolerance and a long-term investment horizon, looking to capitalize on the growth potential of rising companies.

Benefits of Investing in Small Cap Mutual Funds

• small cap mutual funds have high growth potential as smaller companies can expand rapidly unlike large, established companies. As the risk is higher, it offers higher returns to the investors.

• Adding small cap mutual funds to your investment portfolio can help you to diversify the potential risks as these funds typically invest in a broad range of industries and sectors.

• small cap mutual funds are less-focused by market analysts and media coverages which can lead to undervaluation of stocks. This gives an opportunity to investors to benefit from investing in these undervalued companies.

Top 10 Small Cap Mutual Funds 2024

The below list has been compiled according to the latest CRISIL rankings published on their official website. CRISIL ranking of mutual funds is based on fund NAV history, AUM and complete portfolio disclosure. The basic parameters for inclusion of funds in CRISIL ranking are fund returns and volatility, balanced diversification, liquidity, asset quality and duration. 

The ranks are assigned on a scale of 1 to 5, with CRISIL Fund Rank 1 indicating 'Exceptional Performance', Rank 2 indicating ‘Good Performance’, Rank 3 indicating ‘Average Performance’, Rank 4 indicating ‘Below-Average Performance’ and Rank 5 indicating ‘Relatively Weak Performance’. In any peer group, the top 10 percentile of funds are ranked as CRISIL Fund Rank 1 and the next 20 percentile as CRISIL Fund Rank 2 and so on. 

In 2024, several small cap mutual funds in India have been performing exceptionally well. Here are the top performing small cap mutual funds of 2024 that you should consider investing in:

Note: The figures for below mentioned funds are recorded as of 22 July, 2024.

1. Quant Small Cap Fund Direct Plan Growth

The fund has 98.17% investment in equities of which 31.15% is in Large Cap stocks, 9.46% in Mid Cap stocks, and 57.56% in Small Cap stocks. The fund has 0.87% investment in Debt. Majority of its funds are invested in Financial, Energy, Services, Construction, and Healthcare sectors.

Fund Overview:

• AUM (fund size) - Rs.22,967 Cr

• Expense Ratio – 0.64%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.1000 or Lump Sum Rs.5000

• Risk – Very High

• CRISIL Ranking – 1

• 5-year trailing returns - 46.31%

2. Bandhan Small Cap Fund Direct Growth

The fund has 93.827% investment in equities of which 8.26% is in Large Cap stocks, 16.94% is in Mid Cap stocks, and 68.62% in Small Cap stocks. The fund has 0.04% investment in Debt. Majority of its funds are invested in Financial, Services, Healthcare, Capital Goods, Metals & Mining sectors.

Fund Overview:

• AUM (fund size) - Rs.5,880 Cr

• Expense Ratio – 0.33%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - BSE 250 SmallCap TRI

• Min. Investment - SIP Rs.500 or Lump Sum Rs.5000

• Risk – Very High

• CRISIL Ranking – 1

• 3-year trailing returns - 28.44% (Launched in 2020)

3. Nippon India Small Cap Fund Direct- Growth

The fund has 95.91% investment in equities of which 11.26% is in Large Cap stocks, 12.65% is in Mid Cap stocks, and 72% in Small Cap stocks. Majority of its funds are invested in Capital Goods, Financial, Services, Healthcare, and Consumer Staples sectors.

Fund Overview:

• AUM (fund size) - Rs.56,469 Cr

• Expense Ratio – 0.64%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.500

• Risk – Very High

•  CRISIL Ranking – 2

• 5-year trailing return - 37.29%

4. HDFC Small Cap Fund Direct Growth

The fund has 92.62% investment in equities of which 4.59% is in Large Cap stocks, 9.31% is in Mid Cap stocks, and 78.72% in Small Cap stocks. Majority of its funds are invested in Financial, Services, Healthcare and Capital Goods sectors.

Fund Overview:

• AUM (fund size) - Rs.31,523 Cr

• Expense Ratio – 0.67%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - BSE 250 SmallCap TRI

• Min. Investment - SIP Rs.500 or Lump Sum Rs.1000

• Risk – Very High

• CRISIL Ranking – 2

• 5-year trailing return - 28.78%

5. Franklin India Smaller Companies Direct Fund Growth

The fund has 97.06% investment in equities of which 4.82% is in Large Cap stocks, 13.12% is in Mid Cap stocks, and 79.13% in Small Cap stocks. The fund has 0.18% investment in Debt. Majority of its funds are invested in Capital Goods, Financial, Construction, Services, and Consumer Discretionary sectors.

Fund Overview:

• AUM (fund size) - Rs.14,023 Cr

• Expense Ratio – 0.91%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.500 or Lump Sum Rs.5000

• Risk – Very High

• CRISIL Ranking – 2

• 5-year trailing return - 30.51%

6. HSBC Small Cap Fund Direct Growth

The fund has 97.54% investment in equities of which 1.94% is in Large Cap stocks, 22.07% is in Mid Cap stocks, and 73.53% in Small Cap stocks. Majority of its funds are invested in Capital Goods, Construction, Services, Materials, Metals & Mining sectors.

Fund Overview:

• AUM (fund size) - Rs.16,397  Cr

• Expense Ratio – 0.65%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.1000 or Lump Sum Rs.5000

• Risk – Very High

• CRISIL Ranking – 3

• 5-year trailing return - 31.49%

7. ICICI Prudential Small Cap Fund Direct Plan Growth

The fund has 90.64% investment in equities of which 7.82% is in Large Cap stocks, 11.03% is in Mid Cap stocks, and 71.8% in Small Cap stocks. Majority of its funds are invested in Capital Goods, Materials, Services, and Chemicals sectors.

Fund Overview:

• AUM (fund size) - Rs.8,438 Cr

• Expense Ratio – 0.69%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.500

• Risk – Very High

• CRISIL Ranking – 3

• 5-year trailing return - 30.84%

8. Tata Small Cap Fund Direct Growth

The fund has 93.32% investment in equities of which 4.23% is in Mid Cap stocks and 89.09% in Small Cap stocks. Majority of its funds are invested in Services, Financial, Capital Goods, and Chemicals sectors.

Fund Overview:

• AUM (fund size) - Rs.7,868 Cr

• Expense Ratio – 0.32%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.500

• Risk – Very High

• CRISIL Ranking – 3

• 5-year trailing return - 34.17%

9. Canara Robeco Small Cap Fund Direct Growth

The fund has 96.07% investment in equities of which 10.89% is in Large Cap stocks, 18.02% is in Mid Cap stocks, and 67.16% in Small Cap stocks. Majority of its funds are invested in Capital Goods, Financial, Services, and Healthcare sectors.

Fund Overview:

• AUM (fund size) - Rs.11,499 Cr

• Expense Ratio – 0.41%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.1000 or Lump Sum Rs.5000

• Risk – Very High

• CRISIL Ranking – 3

• 5-year trailing return - 35%

10. Axis Small Cap Fund Direct Growth

The fund has 94.56% investment in equities of which 4.35% is in Large Cap stocks, 16.66% is in Mid Cap stocks, and 73.54% in Small Cap stocks. The fund has 5.7% investment in Debt. Majority of its funds are invested in Financial, Construction, Healthcare, and Capital Goods sectors.

Fund Overview:

• AUM (fund size) - Rs.22,262 Cr

• Expense Ratio – 0.55%

• Exit Load – 1% (if redeemed within 1 year)

• Benchmark - NIFTY Smallcap 250 TRI

• Min. Investment - SIP Rs.500 or Lump Sum Rs.1000

• Risk – Very High

• CRISIL Ranking – 3

• 5-year trailing return - 30.7%

Also Read: Top Mutual Fund Houses in India

Conclusion

Investing in small cap mutual funds in India can be a rewarding investment option for those willing to pursue higher risks to gain exceptionally higher returns. Each of the funds listed above has demonstrated strong performance over the years and offers unique benefits, carrying its own risk and return value. As always, it’s advisable to conduct a thorough research or consult with a financial advisor before selecting the most suitable fund for your specific investment goals and risk tolerance. Rupeezy Invest app offers easy investment in mutual funds with zero commission and an extensive analysis of risks and returns to cater to your personal financial management needs. So download the app today!