7 Top-performing Small Cap Mutual Funds with High Returns on 10-Year SIP
Divya Grover
Aug 14, 2023 / Reading Time: Approx. 10 mins
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Small Cap Mutual Fund is a sub-category of equity mutual funds that is known for its very high return potential. However, they also tend to be riskier compared to most other categories due to the higher volatility, low liquidity, and higher downside risk associated with small-cap stocks. Accordingly, the Systematic Investment Plan (SIP) mode is preferable when it comes to investments in Small Cap Mutual Funds as it can help mitigate the risk.
In the last 10 years, six Small Cap Mutual Funds generated SIP returns of 20% or more, thus turning out to be top-performing schemes in the category. The top-performing SIP generated XIRR of 25.9% during this period.
[Read: 5 Best Small Cap Mutual Funds to Invest in 2023 - Top Performing Small Cap Mutual Funds in India]
What are Small Cap Mutual Funds?
Small Cap Mutual Funds are equity-oriented mutual funds that are mandated to invest a minimum of 65% of their total assets in equity and equity-related instruments of small-cap companies (companies ranking from 251st onwards in terms of full market capitalisation). Generally, these companies have a market cap of less than Rs 5,000 crore.
Small Cap Mutual Funds are high risk - high return investment avenues. These companies have the potential to climb up the leadership ladder to become mid-caps or even large-caps of tomorrow. Thus, Small Cap Mutual Funds can potentially generate very high returns and give a boost to the equity mutual fund portfolio.
However, it is important to note that there are various risks associated with small-cap companies. These companies have smaller operations with limited access to various resources. At times, if there is a constraint on resources, they may face risk to survival in case of economic downturn.
Further, there is liquidity risk associated with them as the limited number of shares makes it difficult for investors to buy and sell as per their wish. That said, a strong business helmed by a well-built management team, along with the availability of stock at a reasonable price, can make it a very attractive investment.
Small Cap Mutual Fund category average SIP returns over different time frames
Past performance is not an indicator of future returns.
Data as of August 11, 2023
Returns are XIRR in percentage
Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
What is an SIP?
The SIP mode allows mutual fund investors to invest a certain fixed sum regularly over the long term in the scheme/s of their choice. This helps develop a financial discipline - the key to successful investing. It also enables averaging of investment costs as more units are added when the equity markets are trading low and fewer units when the markets are scaling up. This feature enhances the power of compounding, allowing the investors' wealth to grow leaps and bounds over the long term. The tool used to calculate SIP returns is known as XIRR (Extended Internal Rate of Return).
[Read: 5 Key Benefits of Investing in Mutual Funds via SIP]
[Read: What is XIRR in Mutual Funds? And How to Calculate it?]
In this article, we will look at the top-performing Small Cap Mutual Funds based on 10-year SIP returns. You may also check out the video below:
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #1: Nippon India Small Cap Fund
Launched in September 2010, Nippon India Small Cap Fund currently has an AUM of Rs 34,469 crore, making it the largest scheme in the Small Cap Mutual Fund category. In the last 10 years, Nippon India Small Cap Fund grew at an XIRR of 25.9%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 4,72,365. The fund's top stock holdings include Tube Investments of India, HDFC Bank, CreditAccess Grameen, KPIT Technologies, and Tejas Networks.
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Click here to read our detailed analysis of Nippon India Small Cap Fund.
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #2: SBI Small Cap Fund
Launched in September 2009, SBI Small Cap Fund currently has an AUM of Rs 20,018 crore. In the last 10 years, SBI Small Cap Fund grew at an XIRR of 24%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 4,27,553. The fund's stock holdings include Blue Star, CMS Infosystems, Carborundum Universal, Kalpataru Projects International, and Elgi Equipments.
| Scheme Name |
Total Amount Invested (Rs) |
Present Value (Rs) |
10-Year XIRR (%) |
| SBI Small Cap Fund |
1,20,000 |
4,27,553 |
24.01 |
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Click here to read our detailed analysis of SBI Small Cap Fund.
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #3: Quant Small Cap Fund
Launched in October 1996, Quant Small Cap Fund currently has an AUM of Rs 6,780 crore. In the last 10 years, Quant Small Cap Fund grew at an XIRR of 23.5%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 4,16,923. The fund's stock holdings include Reliance Industries, HDFC Bank, Bikaji Foods International, Usha Martin, and Aegis Logistics.
| Scheme Name |
Total Amount Invested (Rs) |
Present Value (Rs) |
10-Year XIRR (%) |
| Quant Small Cap Fund |
1,20,000 |
4,16,923 |
23.54 |
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Click here to read our detailed analysis of Quant Small Cap Fund.
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #4: Kotak Small Cap Fund
Launched in February 2005, Kotak Small Cap Fund currently has an AUM of Rs 11,597 crore. In the last 10 years, Kotak Small Cap Fund grew at an XIRR of 22.3%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 3,90,703. The fund's stock holdings include Carborundum Universal, Cyient, Ratnamani Metals & Tubes, Century Plyboards, and Galaxy Surfactants.
| Scheme Name |
Total Amount Invested (Rs) |
Present Value (Rs) |
10-Year XIRR (%) |
| Kotak Small Cap Fund |
1,20,000 |
3,90,703 |
22.34 |
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Click here to read our detailed analysis of Kotak Small Cap Fund.
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #5: HDFC Small Cap Fund
Launched in April 2008, HDFC Small Cap Fund currently has an AUM of Rs 21,067 crore. In the last 10 years, HDFC Small Cap Fund grew at an XIRR of 21.6%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 3,74,711. The fund's stock holdings include Sonata Software, Bank of Baroda, Firstsource Solutions, Bajaj Electricals, and IDFC.
| Scheme Name |
Total Amount Invested (Rs) |
Present Value (Rs) |
10-Year XIRR (%) |
| HDFC Small Cap Fund |
1,20,000 |
3,74,711 |
21.57 |
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Click here to read our detailed analysis of HDFC Small Cap Fund.
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #6: DSP Small Cap Fund
Launched in June 2007, DSP Small Cap Fund currently has an AUM of Rs 11,651 crore. In the last 10 years, DSP Small Cap Fund grew at an XIRR of 21.5%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 3,72,298. The fund's stock holdings include Cyient, Suprajit Engineering, Nilkamal, Ratnamani Metals & Tubes, and Triveni Engineering & Industries.
| Scheme Name |
Total Amount Invested (Rs) |
Present Value (Rs) |
10-Year XIRR (%) |
| DSP Small Cap Fund |
1,20,000 |
3,72,298 |
21.45 |
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Top-performing Small Cap Mutual Fund on 10-Year SIP Returns #7: ICICI Pru Smallcap Fund
Launched in October 2007, ICICI Pru Small Cap Fund currently has an AUM of Rs 6,511 crore. In the last 10 years, ICICI Pru Smallcap Fund grew at an XIRR of 19.8%. A monthly SIP of Rs 1,000 over a 10-year period (i.e. total investment of Rs 1,20,000) would now be valued at Rs 3,40,334. The fund's stock holdings include Cyient, PVR Inox, EPL, Krishna Institute of Medical Sciences, and Rolex Rings.
| Scheme Name |
Total Amount Invested (Rs) |
Present Value (Rs) |
10-Year XIRR (%) |
| ICICI Pru Smallcap Fund |
1,20,000 |
3,40,334 |
19.79 |
Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory.
Data as of August 11, 2023
Returns are XIRR in percentage
Monthly SIP of Rs 1,000 over a 10-year period in Direct plan - Growth option considered
(Source: ACE MF, data collated by PersonalFN)
Do note that Small Cap Mutual Funds carry very high risk and is therefore only suitable for aggressive investors who have the appetite to handle intense market volatility and have a long-term investment horizon of at least 7 years. When selecting Small Cap Mutual Funds for the portfolio, avoid getting swayed by the recent performance. Instead, focus on schemes that select fundamentally sound, quality, and liquid stocks for the portfolio.
Related links:
Market at All-time High: Is This a Good Time to Invest in Mid Cap and Small Cap Mutual Funds?]
The Investment Strategy Mutual Fund Investors May Follow as Sensex, Nifty Touch Record Highs
Should You Kick-start Your SIPs Amid Market Highs? Find Out Now
Market at All-time High: How to Select the Best Mutual Funds for SIP Investment Now?
7 Top Performing Mutual Funds Based on 10-Year SIP Returns
7 Top-Performing Mid Cap Mutual Funds with High Returns on 10-Year SIP
Note: This write-up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully.
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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.