Top 5 Small Cap Mutual Funds to Supercharge Your SIP in 2025
When it comes to building serious wealth through mutual funds, Small Cap Mutual Funds are where the magic happens—if you have patience and a strong stomach for volatility.
According to SEBI regulations, small cap mutual funds must invest at least 65% of their assets in small-cap stocks. These companies are often under-the-radar and can deliver outsized returns, but they’re also highly sensitive to market swings. That means the ride can be bumpy—but the destination? Absolutely worth it.
If you’ve got a long-term horizon (think 7-10 years or more), you’re in for potentially massive returns. So, ready to discover the Top 5 Small Cap Mutual Funds that’ve crushed it over the past decade? Let’s dive right in.
What Are Small Cap Mutual Funds and Why Should You Care?
Before we get to the rankings, let’s quickly understand why Small Cap Mutual Funds are such a hot topic among savvy investors.
Key Benefits:
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High Growth Potential – Small caps are in the early stages of business growth.
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Diversification – These funds invest across a wide basket of small companies.
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Professional Management – Fund managers carefully select high-conviction bets.
Risks to Know:
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Market Volatility – These stocks react sharply to market changes.
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Liquidity Issues – Smaller companies can be harder to exit during downturns.
Pro Tip: Stay invested for at least 7-10 years to ride out the volatility and reap the long-term gains.
Top 5 Small Cap Mutual Funds with Highest 10-Year SIP Returns
Let’s now look at the Top 5 Small Cap Mutual Funds that would’ve made your ₹15,000 monthly SIP over 10 years turn into a jaw-dropping corpus.
| Rank | Fund Name | 10-Year SIP Return (Annualized) | Corpus from ₹15K SIP (₹18L Invested) |
|---|---|---|---|
| 1 | Quant Small Cap Fund | 24.29% | ₹65,76,000 |
| 2️ | Nippon India Small Cap Fund | 22.91% | ₹60,37,000 |
| 3️ | HSBC Small Cap Fund | 19.69% | ₹50,75,000 |
| 4️ | HDFC Small Cap Fund | 19.43% | ₹50,02,000 |
| 5️ | Franklin India Smaller Companies Fund | 18.02% | ₹46,38,000 |
Let’s break them down one by one…
1. Quant Small Cap Fund – The Dark Horse That Outperformed All
Why it’s No.1?
This fund has consistently delivered the highest SIP returns over a 10-year span. Despite market ups and downs, it’s grown a ₹15K monthly SIP into a massive ₹65.76 lakh.
Key Highlights:
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Annualized SIP Returns: 24.29%
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AUM: ₹22,832 Cr
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NAV: ₹244.41
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Expense Ratio: 0.69%
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Minimum SIP: ₹1,000
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Small Cap Allocation: 65.75%
Expert Insight: The fund’s tactical allocation and aggressive small cap exposure make it a high-return pick for risk-tolerant investors.
2. Nippon India Small Cap Fund – The Reliable Performer
This fund is a crowd favorite—and for good reason. It boasts consistent returns with one of the largest AUMs in the small-cap category.
Key Highlights:
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Annualized SIP Returns: 22.91%
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AUM: ₹50,826 Cr
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NAV: ₹165.37
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Expense Ratio: 0.73%
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Minimum SIP: ₹500
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Small Cap Allocation: 67.12%
Did You Know? It converted a ₹15K monthly SIP into over ₹60 lakh in just a decade!
3. HSBC Small Cap Fund – The Quiet Outperformer
Not as widely talked about, but HSBC Small Cap Fund has quietly delivered strong results, especially for patient investors.
Key Highlights:
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Annualized SIP Returns: 19.69%
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AUM: ₹13,334 Cr
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NAV: ₹78.49
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Expense Ratio: 0.65%
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Minimum SIP: ₹1,000
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Small Cap Allocation: 70.76%
Smart Pick: Its lower expense ratio and solid long-term strategy make it ideal for cost-conscious investors.
4. HDFC Small Cap Fund – The Steady Climber
A veteran in the game, HDFC Small Cap Fund has maintained a balanced yet aggressive approach to small caps.
Key Highlights:
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Annualized SIP Returns: 19.43%
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AUM: ₹28,120 Cr
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NAV: ₹134.53
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Expense Ratio: 0.93%
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Minimum SIP: ₹500
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Small Cap Allocation: 80.03%
Fun Fact: It’s among the most trusted funds by long-term retail investors due to its consistency.
5. Franklin India Smaller Companies Fund – The Veteran Player
One of the oldest and most stable funds in the category, this fund is ideal for conservative small-cap investors.
Key Highlights:
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Annualized SIP Returns: 18.02%
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AUM: ₹11,257 Cr
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NAV: ₹169.21
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Expense Ratio: 0.98%
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Minimum SIP: ₹500
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Small Cap Allocation: 75.61%
Why Consider It? It’s best suited for investors seeking a less volatile but still rewarding small cap exposure.
How to Choose the Best Small Cap Mutual Fund for You?
Here’s a checklist before you invest:
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Long-Term Horizon (7–10 years+)
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Willingness to face short-term volatility
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Fund’s past performance across market cycles
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Expense Ratio and Fund Manager reputation
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AUM and Liquidity
FAQs
Q: Which Small Cap Mutual Fund gave the highest return in 10 years?
A: Quant Small Cap Fund delivered the highest SIP return of 24.29%, turning ₹15K monthly into ₹65.76 lakh in 10 years.
Q: Are Small Cap Funds risky?
A: Yes, they’re volatile but offer high long-term rewards. Ideal for risk-tolerant, long-term investors.
Q: What’s the best time to invest in Small Cap Mutual Funds?
A: Anytime is good if you’re investing via SIP with a 7–10 year horizon.
Final Thoughts: Are Small Cap Mutual Funds Right for You?
If your goal is wealth creation, and you’re ready to play the long game, investing in the Top 5 Small Cap Mutual Funds could be your smartest move. These funds have transformed modest SIPs into multi-lakh portfolios, and they could do the same for you—with patience and discipline.
So, what are you waiting for? Start your SIP today and let compounding do its thing!
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