Volatile markets often put small-cap mutual funds under the spotlight. These funds are known for their aggressive wins and sharp drops. Yet, some of the best funds under this category returned 21.39% in the last three years to investors.    

If you have a high tolerance for risk and are ready to capitalize on promising opportunities, you must be looking for some small-cap funds that showed resilience in the last five years. In this blog, we have shortlisted five of these funds that delivered attractive returns to investors during this period.

5 Small-Cap Mutual Funds To Invest In and Beat Market Volatility

These five good small cap mutual funds have consistently delivered impressive returns in the last three to five years.

• SBI Small Cap Fund 

If you’re ready to withstand short-term volatility and have a long-term horizon, the SBI Small Cap Fund can be a pick. It invests in key sectors like industrials, consumer cyclical, basic materials, financial services, and consumer durables. The minimum amounts required to create an SIP or invest in lump sum in this fund are INR 500 and INR 5,000, respectively.

• AUM: INR 35,563.00 crore
• NAV: INR 193.7537
• Expense ratio: 0.73%
• 1-Year return: -6.42%
• 3-Year return: 16.28%
• 5-Year return: 24.40%

• Bandhan Small Cap Fund

The Bandhan Small Cap Fund is ideal for investors looking to build a diversified portfolio and capture opportunities in lesser-known funds that look fundamentally strong. It delivered an impressive 31.56% return to investors in the last five years. The sectoral weightage of this small-cap fund looks well-balanced, with investments in financial services, industrials, healthcare, consumer cyclical, and basic materials.

• AUM: INR 14,062.20 crore
• NAV: INR 49.2310
• Expense ratio: 0.40%
• 1-Year return: – 2.19%
• 3-Year return: 30.27%
• 5-Year return: 31.56%

• Invesco India Small Cap Fund

This small-cap mutual fund allows investors to put their funds in niche opportunities in under-researched companies. You can create an SIP in this fund with just INR 500, or invest a lump sum amount of INR 1,000. The Invesco Small Cap fund invests in sectors like financial services, healthcare, industrials, and consumer cyclical.

• AUM: INR 7,580.46 crore
• NAV: INR 45.0100
• Expense ratio: 0.40%
• 1-Year return: 0.72%
• 3-Year return: 26.21%
• 5-Year return: 30.57%

• HDFC Small Cap Fund

If you prefer a consistent and research-oriented approach to investing for aggressive growth, the HDFC Small Cap Fund can be suitable. It invests in quality businesses with strong fundamentals. Some of the sectors where it allocates your funds include industrials, consumer cyclical, technology, healthcare, and financial services.

• AUM: INR 36,353.10 crore
• NAV: INR 158.5000
• Expense ratio: 0.71%
• 1-Year return: -0.12%
• 3-Year return: 24.07%
• 5-Year return: 30.07%

• Nippon India Small Cap

Investors with a higher appetite for returns may choose the Nippon India Small Cap to diversify their portfolio across a spectrum of smaller companies. Its 5-year return of 32%+ looks impressive. The sectoral allocation for this fund includes industrials, financial services, consumer cyclical, basic materials, and healthcare.

• AUM: INR 65,922.00 crore
• NAV: INR 184.3757
• Expense ratio: 0.64%
• 1-Year return: -7.23%
• 3-Year return: 23.96%
• 5-Year return: 32.15%

Conclusion

If you’re willing to ride the growth trajectory of small-cap funds, you need patience and, most importantly, a higher risk potential. These funds can be useful wealth creators for those who remain invested through all the market cycles. 

In this blog, we shortlisted five promising small-cap funds that have endured market volatility and outperformed many other indices in the last five years. If you’re ready to take calculated risks while remaining disciplined, invest in these research-oriented funds to build long-term wealth.

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