According to reports from Dalal Street Investment Journal, three small-cap mutual fund schemes have emerged as standout performers over a five-year monthly SIP period. ITI Small Cap Fund leads with the highest returns at 21.98% annualised, followed by Bandhan Small Cap Fund at 21.70% and Invesco India Smallcap Fund at 20.98%. These funds have demonstrated consistent performance despite the inherent volatility associated with small-cap investments. Recent analysis shows that small-cap mutual funds have been able to generate good SIP returns over extended periods due to investment in companies with huge growth potential and scalable business models.
As reported by Dalal Street Investment Journal, the top-performing schemes show significant variation in asset size. ITI Small Cap Fund manages ₹3,454 crore in assets, while Bandhan Small Cap Fund commands a much larger ₹31,103 crore. Invesco India Smallcap Fund falls in the middle with ₹14,475 crore in assets under management. The size disparity reflects different investment approaches and market positioning strategies among these funds.
According to the analysis, small-cap mutual funds carry higher risk compared to large-cap alternatives due to their investment focus on smaller companies. As reported by Dalal Street Investment Journal, these funds invest in companies ranked below the top 250 listed companies by market capitalization under SEBI classification. Small-cap companies are generally more vulnerable to economic slowdowns, rising costs, and difficult market conditions, with their share prices experiencing sharper price swings than larger companies. Recent research confirms that small-cap funds happen to be one of the most volatile equity funds, making them suitable only for investors with sufficiently long investment horizons.
As reported by Dalal Street Investment Journal, investors should not rely solely on past performance when selecting small-cap mutual funds. The analysis emphasizes that portfolio composition, stock-selection approach, sector exposure, and risk management are equally important factors to consider. Two small-cap funds can generate different returns even when investing in the same broad category, making comprehensive evaluation necessary for informed investment decisions. Recent analysis suggests that investors should evaluate multiple factors including performance in varied market environments, quality of portfolio and diversification, consistency in fund management, and compatibility with their investment objectives and horizons.
