At the time of investing in a mutual fund, investors tend to examine the historical returns delivered by the scheme and compare it to other funds in the same category.
Although there are other factors also which make a scheme “investment worthy”, investors still base their decision on the scheme’s historical returns vis-à-vis other factors.
Here, we shed light on small cap mutual funds, which have given higher annualised returns than 25 percent in the past 10 years.
At the outset, let us first understand what is a small cap mutual fund.
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Small cap fund
These are equity mutual funds which invest a minimum of 65 percent of their assets in small cap stocks. And small cap stocks are securities of companies, which are ranked below 250 companies when measured in terms of their market capitalisation.
Now, we list out the small cap funds which have delivered more than 30 percent in annualised returns for the past 10 years.
There are 27 small cap mutual funds with total assets under management (AUM) amounting to ₹2.66 lakh crore. These schemes received an inflow of ₹2,208 crore in April alone, higher than the corresponding inflow to mid-cap ( ₹1,793 crore) and large cap schemes ( ₹357.56 crore).
| Small Cap Mutual Funds | 10-year-returns (%) |
| Quant Small Cap Fund | 39.06 |
| Bank of India Small Cap Fund | 31.68 |
| Nippon India Small Cap Fund | 30.88 |
| Edelweiss Small Cap Fund | 28.50 |
| Canara Robeco Small Cap Fund | 27.76 |
| Kotak Small Cap Fund | 27.38 |
| Axis Small Cap Fund | 26.41 |
| ICICI Prudential Smallcap Fund | 26.24 |
| Invesco India Smallcap Fund | 26.87 |
(Source: AMFI; Returns as on May 9, 2024)
As we can see in the table above, the top-performing small cap fund (Quant Small Cap) has delivered 39.06 percent annualised return in the past 10 years. This is followed by Bank of India Small Cap Fund (31.68%), Nippon India Small Cap Fund (30.88%) and Edelweiss Small Cap Fund (28.50%).
However, it is perhaps vital to mention that the historical returns – despite being an important metric of mutual fund scheme – do not guarantee future returns.
Additionally, small caps are seen as riskier investments when compared to large cap funds and blue chip investments. Capital markets regulator Sebi voiced apprehensions regarding the lofty valuations of small-cap and mid-cap stocks, telling money managers to restrict inflows into these schemes.
Following this, the regulator has kicked off monthly stress tests in the wake of concerns about market bubbles. Now all mutual funds are supposed to release monthly data to indicate the number of days it would take to liquidate its small cap and mid cap portfolio.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.
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First Published:
10 May 2024, 07:35 PM IST
Business NewsMutual FundsTop mutual funds: These 9 small cap schemes delivered over 25% annualised returns in the past 10 years
