Best-Performing Mutual Funds in 5 Years: Top 10 Small-Cap Schemes Offering Annualised Returns of up to 35%
Nippon India Small Cap Fund and Bandhan Small Cap Fund have emerged as the top-performing schemes in the small-cap category over the last five years.
In recent years, mutual fund schemes have gained significant popularity among Indian investors owing to their potential to deliver higher returns compared to traditional investment avenues. Offering market-linked gains and greater flexibility, mutual funds cater to investors across income segments. Among them, small-cap funds have particularly stood out, delivering impressive returns despite phases of market volatility.
As per SEBI’s classification, small-cap funds are those that invest at least 65% of their assets in equity and equity-related instruments of small-cap companies. These schemes are typically chosen by investors seeking exposure to high-growth potential equity assets. While they have the capacity to outperform mid- and large-cap funds during bullish phases, they also carry higher volatility and risk, as they predominantly invest in smaller companies.
To shortlist the best-performing mutual fund schemes, investors often compare returns over a fixed period with other funds in the same category. Although past performance does not guarantee consistent future gains due to market fluctuations, historical data does provide insights into a scheme’s track record and potential.
Before committing to a mutual fund investment, experts recommend that investors carefully assess their financial goals, risk tolerance, and investment time frame.
According to the Association of Mutual Funds in India (AMFI), the following are the top 10 small-cap mutual funds that have delivered annualised returns between 30% and 35% over the past five years:
- Nippon India Small Cap Fund – 34.71%
- Bandhan Small Cap Fund – 32.98%
- HSBC Small Cap Fund – 32.14%
- Franklin India Small Cap Fund – 31.61%
- HDFC Small Cap Fund – 31.90%
- Invesco India Small Cap Fund – 31.87%
- Tata Small Cap Fund – 31.59%
- BOI Small Cap Fund – 30.69%
- Edelweiss Small Cap Fund – 30.54%
- ICICI Prudential Small Cap Fund – 30.28%
While these schemes have posted exceptional returns in recent years, market analysts advise exercising caution before investing purely based on past performance. A prudent approach would be to evaluate the growth prospects of a small-cap fund in light of prevailing economic conditions and market trends.
