Small-cap funds have emerged as the best-performing equity category in FY27 so far, delivering an average return of 22.31% between 1 April and 31 July. According to reports from Mint and analysis by Fortune Investment Services, they were followed by mid-cap funds with 17.22%, flexi-cap funds with 14.06%, and large-cap funds with 10.52% returns. The financial year 2026-27 began amid uncertainty with global tariff concerns, geopolitical tensions and volatile crude oil prices putting pressure on Indian equities. However, small-cap funds generated the strongest gains during this period, with several schemes delivering returns above 30%. The Nifty Smallcap 250 Index reached a high of 18,365 on August 5, 2026, with direct plans of 32 small-cap funds also scaling their 52-week high NAVs on the same day, as per ACE MF data.
The JM Small Cap Fund topped the small-cap category with 32.41% returns, followed by Bank of India Small Cap Fund at 32.22% and Motilal Oswal Small Cap Fund at 31.49%. As reported by Mint and Fortune Investment Services, at the other end of the spectrum, The Wealth Company Small Cap Fund delivered the lowest return of 14.57%. Among the four equity fund categories, small-cap funds generated the strongest gains during the period, with several schemes delivering returns above 30%. Among newly launched funds, Abakkus Small Cap Fund delivered 26.13% returns since its launch in March 2026, while Groww Small Cap Fund posted 23.07% returns since January 2026.
Data reveals that 15 of the 32 funds have delivered more than 20% returns since inception, spanning both established and newly launched schemes. Among schemes with a track record of at least five years, Bandhan Small Cap Fund emerges as the top performer with 30.95% returns since inception, followed by Bank of India Small Cap Fund at 27.51%, Edelweiss Small Cap Fund at 25.15%, and Invesco India Smallcap Fund at 24.24%. Most long-running small-cap funds have delivered annualised returns in the range of 17% to 23%. Funds launched around 2013-2014, which have a much longer performance history, show relatively consistent performance including Axis Small Cap Fund at 22.78%, SBI Small Cap Fund at 22.86%, DSP Small Cap Fund at 21.54%, and HSBC Small Cap Fund at 19.93%.
Some of the recently launched small-cap funds have delivered strong returns despite their limited track record, suggesting that funds launched during or after the recent market correction have benefited from the subsequent rally. There has been a small surge in the small cap segment over the past six months, with the Nifty Smallcap 250 index rising nearly 16% during this time. However, there is also greater dispersion in returns among new launches. For instance, Abakkus and Groww small cap funds have delivered over 20% returns since launch while other recent schemes like Helios, Samco, Bajaj Finserv, and JM Small Cap Fund have less than 15% returns in this period.
Large-cap funds delivered the lowest average return among the four categories at 10.52%. According to Mint and Fortune Investment Services, Quant Large Cap Fund topped the category with 19.79% returns, followed by Invesco India Large Cap Fund and Taurus Large Cap Fund. Samco Large Cap Fund was the poorest performer in the category, delivering a return of just 0.79%. The large-cap category showed relatively modest gains compared to other equity fund categories during this period.
