5 Small-Cap Funds Deliver Up to 26.84% Return: Full List
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Small-cap funds can carry higher volatility, but their exposure to smaller companies also gives investors the potential for stronger long-term returns.
✨ Key Takeaways
As of August 9, 2026, five Small-Cap funds featured among the top performers, with returns ranging from 19.11 per cent to 26.84 per cent. Bank of India Small Cap Fund topped the list with a 26.84 per cent return, followed by TrustMF Small Cap Fund and Motilal Oswal Small Cap Fund.
Before looking at the top-performing funds, it is important to understand what small-cap funds are and why their returns can be accompanied by higher risk.
What Are Small-Cap Funds?
Small-cap Mutual Funds invest primarily in small-cap companies. These businesses are generally smaller in terms of market capitalisation and may have greater room to expand compared with larger, more established companies.
Their relatively smaller size can create opportunities for faster business and earnings growth. If these companies successfully scale their operations, investors can potentially benefit from strong share price appreciation over the long term.
However, the same factor also makes small-cap funds riskier. Smaller companies can be more sensitive to economic slowdowns, changes in interest rates, earnings pressure and shifts in investor sentiment. Their share prices can therefore rise or fall more sharply than those of Large-Cap companies.
This means small-cap funds have the potential to deliver higher returns, but investors also need to be prepared for periods of significant volatility. The category is generally more suitable for investors with a higher risk appetite and a longer investment horizon.
5 Best Performing Small-Cap Funds
|
Rank |
Fund Name |
Return (per cent) |
|
1 |
Bank of India Small Cap Fund |
26.84 |
|
2 |
TrustMF Small Cap Fund |
23.11 |
|
3 |
Motilal Oswal Small Cap Fund |
21.54 |
|
4 |
Union Small Cap Fund |
20.93 |
|
5 |
ITI Small Cap Fund |
19.11 |
What Investors Should Know
The performance of these funds shows the return potential available in the small-cap segment. However, investors should not evaluate a fund only on the basis of recent returns.
Small-cap funds can experience sharp corrections during periods of market stress. Investors should consider factors such as the fund's investment strategy, portfolio composition, expense ratio, consistency of performance and risk level before making an investment decision.
Past returns also do not guarantee future performance. For investors who can tolerate higher volatility and have a long-term investment horizon, small-cap funds can provide exposure to companies with significant growth potential.
Disclaimer: The article is for informational purposes only and not investment advice.