Synopsis: Small-cap mutual funds have attracted investor attention due to their growth potential and strong recent performance amid market volatility. This article highlights 6 small-cap mutual funds that delivered strong 3-month returns
Small-cap mutual funds invest in companies beyond the top 250 stocks by market capitalization, providing investors exposure to emerging businesses with strong growth potential. These funds offer the potential for higher returns compared with large-cap funds but also involve higher risks due to greater volatility associated with smaller companies. Despite uncertain market conditions, changing interest rate expectations, and global economic challenges, these small-cap mutual funds have delivered strong performance in recent times.
1. JM Small Cap Fund
- NAV: ₹11.84
- AUM: ₹809.39 Cr
- Expense Ratio: 0.95%
- Exit Load: 1% (within 180 days)
- 3-months Returns: 21.75%
2. TRUSTMF Small Cap Fund
- NAV: ₹13.22
- AUM: ₹2,476.03 Cr
- Expense Ratio:1.51%
- Exit Load: 1% (within 180 days)
- Minimum SIP: ₹1,000
- 3-months Returns: 18.46%
3. Motilal Oswal Small Cap Fund
- NAV: ₹16.96
- AUM: ₹7,179.39 Cr
- Expense Ratio: 0.85%
- Exit Load: 1% (within 365 days)
- Minimum SIP: ₹500
- 3-months Returns: 17.25%
4. ITI Small Cap Fund
- NAV: ₹36.97
- AUM: ₹3,321.83 Cr
- Expense Ratio: 0.85%
- Exit Load: 0.50% (within 3 months)
- Minimum SIP: ₹500
- 3-months Returns: 16.43%
5. Bank of India Small Cap Fund
- NAV: ₹62.53
- AUM: ₹2,572.40 Cr
- Expense Ratio: 0.69%
- Exit Load: 1% (within 3 months)
- Minimum SIP: ₹1,000
- 3-months Returns: 16.40%
6. Quant Small Cap Fund
- NAV: ₹314.41
- AUM: ₹33,739.05 Cr
- Expense Ratio: 0.89%
- Exit Load: 1% (within 1 year)
- Minimum SIP: ₹1,000
- 3-months Returns: 15.93%
Note: NAV, AUM, expense ratio, exit load, and 3-month returns are based on the latest available data from Value Research and Groww as of July 20, 2026.
Why Are Small Cap Funds Gaining Attraction?
Small-cap mutual funds have gained popularity amongst the investors because of the huge potential for growth that is possible in such companies. Investors are considering investing in the category owing to the potential that has emerged with respect to the growth of the Indian economy, increased consumption in India, infrastructure growth, and emergence of new firms.
However, even during times of uncertainty in the market, small-cap stocks have exhibited their strength owing to the identification of companies with strong earning capacity by the investors. Market corrections can also create opportunities for long-term investors to accumulate quality small-cap stocks at relatively attractive valuations. Nevertheless, small-cap funds are still highly risky and can see volatility during times of slowdown and uncertainties in the economy.
Key Takeaways
- JM Small Cap Fund recorded the highest three-month return among the selected funds at 21.75%.
- Small-cap funds provide exposure to emerging companies with high growth potential but also carry higher volatility.
- Investors must consider performance over time, quality of the portfolio, expense ratio, and other risks while investing.
- Small cap funds are best for investors with a long-term approach and higher risk tolerance.
Who Should Consider Small Cap Funds?
Small-cap mutual funds are suitable for investors with a 5–7 year investment horizon, higher risk tolerance, and those seeking growth opportunities through emerging companies. However, investors looking for stable returns or with low risk appetite may find them unsuitable due to higher volatility.
