Small-cap mutual funds are an attractive choice for investors seeking high-growth potential. Still, their exposure to small-cap stocks, as mandated by the Securities and Exchange Board of India (SEBI), places them in a high-risk category. These funds must allocate at least 65% of their investments to small cap mutual funds in 2024, defined as companies ranked 250th and beyond in market capitalization.
While these funds tend to rise faster than large-cap and mid-cap funds in a bullish market, they can also experience sharper declines during bearish periods. Despite the risks, small-cap funds have delivered impressive returns over the years.
According to Value Research data, the small-cap mutual fund category has achieved an annualized return of 26.91% over the past year, 22.20% over three years, 31.27% over five years, and 18.09% over ten years. These returns highlight the potential of small-cap funds as a long-term investment option.
Here’s a detailed look at the top 7 small cap mutual funds in 2024 with the highest SIP returns (XIRR) in the past year. For context, a monthly SIP investment of ₹33,333 in each of these funds over one year (total investment of ₹3,99,996) has shown remarkable growth.
Bandhan Small Cap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 38.17%
- AUM: ₹9,248 crore
- NAV: ₹50.57
- Benchmark: BSE 250 SmallCap TRI
- Annualized Return Since Launch (Feb 2020): 39.87%
- Expense Ratio: 0.41%
- Minimum SIP Investment: ₹500
- Minimum Lump Sum Investment: ₹5,000
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,93,155.14
Invesco India Smallcap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 36.60%
- AUM: ₹5,842 crore
- NAV: ₹46.87
- Benchmark: BSE 250 SmallCap TRI
- Annualized Return Since Launch (Oct 2018): 28.38%
- Expense Ratio: 0.41%
- Minimum SIP Investment: ₹500
- Minimum Lump Sum Investment: ₹1,000
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,88,878.39
Bank of India Small Cap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 36.60%
- AUM: ₹1,613 crore
- NAV: ₹54.54
- Benchmark: NIFTY Smallcap 250 TRI
- Annualized Return Since Launch (Nov 2018): 32.67%
- Expense Ratio: 0.46%
- Minimum SIP Investment: ₹1,000
- Minimum Lump Sum Investment: ₹5,000
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,70,641
UTI Small Cap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 29.41%
- AUM: ₹4,651 crore
- NAV: ₹28.39
- Benchmark: NIFTY Smallcap 250 TRI
- Annualized Return Since Launch (Dec 2020): 29.77%
- Expense Ratio: 0.69%
- Minimum SIP Investment: ₹500
- Minimum Lump Sum Investment: ₹5,000
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,69,810.10
Tata Small Cap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 26.98%
- AUM: ₹9,572 crore
- NAV: ₹46.67
- Benchmark: NIFTY Smallcap 250 TRI
- Annualized Return Since Launch (Oct 2018): 28.60%
- Expense Ratio: 0.34%
- Minimum SIP Investment: ₹500
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,63,553.31
HSBC Small Cap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 26.61%
- AUM: ₹17,237 crore
- NAV: ₹97.96
- Benchmark: NIFTY Smallcap 250 TRI
- Annualized Return Since Launch (Apr 2014): 23.95%
- Expense Ratio: 0.68%
- Minimum SIP Investment: ₹1,000
- Minimum Lump Sum Investment: ₹5,000
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,62,608.77
Union Small Cap Fund Direct-Growth
- 1-Year SIP Return (XIRR): 25.29%
- AUM: ₹1,662 crore
- NAV: ₹55.89
- Benchmark: BSE 250 SmallCap TRI
- Annualized Return Since Launch (May 2014): 17.69%
- Expense Ratio: 0.97%
- Minimum SIP and Lump Sum Investment: ₹1,000
- 1-Year SIP Growth: ₹3,99,996 invested grew to ₹4,59,256.49
Key Takeaways
Small-cap mutual funds can be lucrative for investors with a high-risk appetite and a long-term investment horizon. The impressive SIP returns over one year demonstrate their potential for wealth creation, provided investors understand the associated risks. By diversifying investments across well-performing funds, aligning with financial goals, and staying disciplined with SIPs, investors can navigate market fluctuations and maximize returns.
