Three smallcap mutual funds delivered exceptional returns in 2026, with Bank of India Small Cap Fund leading at 27%, followed by Samco Small Cap Fund at 24% and TrustMF Small Cap Fund at 24%. According to The Economic Times, these outstanding funds all achieved at least 23% returns during the calendar year. The top three funds share a significant overlap of five key stock holdings, demonstrating a concentrated approach to industrial growth themes.
The three funds share five key stocks with varying portfolio allocations: Acutaas Chemicals, Anand Rathi Wealth, Sky Gold and Diamonds, Syrma SGS Technology, and TD Power Systems. As reported by The Economic Times, Sky Gold and Diamonds represents the largest holding for Bank of India Small Cap Fund at 3.01%, while TrustMF Small Cap Fund holds 2.07% and Samco Small Cap Fund maintains 0.85% exposure. Anand Rathi Wealth accounts for 3.23% of Samco's portfolio, compared to 1.40% in Bank of India and 0.98% in TrustMF funds.
The common exposure across the five stocks ranges from 7% to 8% for each fund, making the overlap meaningful while allowing for differentiated portfolio construction. According to The Economic Times, these funds demonstrate a shared preference for industrial growth, capital markets, manufacturing, and domestic investment themes. The power sector has emerged as a significant alpha driver, with 30-40% of total alpha attributed to power capex opportunities including transmission and distribution infrastructure, data centers, and backup generators.
Fund managers emphasize long-term themes including CDMO, specialty pharma, diagnostics, and aerospace sectors. As reported by The Economic Times, the power sector represents the biggest source of alpha, with focus on domestic transmission and distribution, exports linked to global data-center demand, and T&D infrastructure rollout. Additional themes include contract development and manufacturing organizations, auto ancillaries, electric vehicles, automobiles, new-age platform companies, and capital markets.
Fund houses continue to favor companies positioned to benefit from India's ongoing investment cycle and manufacturing expansion. According to The Economic Times, Axis Mutual Fund remains cautious on consumer staples due to margin vulnerability from input-cost pressures. The preferred investment themes include banks, consumer discretionary, manufacturing-linked businesses, domestic capex, power and transmission & distribution, industrials, defense, and electronic manufacturing services.
