Top Small-Cap Mutual Funds to Invest in 2025

Strategic Insights -

Five small-cap mutual funds Quant, Nippon, Tata, Bandhan, and Invesco have delivered 30%+ annualised returns over five years, outperforming benchmarks. With consistent pre-sales growth and low expense ratios, these schemes remain the best small-cap mutual funds to invest in 2025. Small-cap funds can rise fast and fall just as quickly, but a five-year view gives a truer sense of how a fund performs across cycles. A focus on core metrics like one-year returns, five-year CAGR, and expense ratio helps gauge true performance.

Key Takeaways:

  • Quant Small Cap Fund has delivered 35.63% annualised returns over five years, outperforming the Nifty Smallcap 250 TRI's 27.6% returns.
  • Nippon India Small Cap Fund has generated 33.85% CAGR over five years versus 27.6% for the Nifty Smallcap 250 TRI.
  • Invesco India Smallcap Fund has compounded at 32.90% over five years, beating its benchmark BSE 250 SmallCap Index's 27.1%.
  • Bandhan Small Cap Fund has a five-year CAGR of 32.74% versus 28.15% for the BSE 250 SmallCap TRI.
  • Tata Small Cap Fund has a five-year CAGR of 31.56% compared to 25.0% for the Nifty Smallcap 100 TRI.
  • The top five funds have an expense ratio ranging from 0.33% to 0.71%, with Invesco India Smallcap Fund having the lowest expense ratio of 0.40%.
  • These funds are categorised as "very high risk" but have delivered strong returns over five years.
  • Evaluating small-cap schemes over longer horizons and ensuring they fit your risk profile and asset allocation is crucial.

Statistics:

  • The five top-performing small-cap funds have an average expense ratio of 0.52%.
  • Over five years, these funds have compounded at an average of 33.42%.
  • Invesco India Smallcap Fund has the lowest expense ratio of 0.40%.
  • Quant Small Cap Fund has the highest five-year CAGR of 35.63%.
  • The funds have managed AUM ranging from Rs 8,055 crore (Invesco India Smallcap Fund) to Rs 66,136 crore (Nippon India Small Cap Fund).

Sources:

  • Financial Express Mutual Fund Screener
  • IE Online Media Services Pvt. Ltd., distributed by Contify.com