📊 Category Deep Dive · Small Cap Funds

Best Small Cap Mutual Funds in India — Returns, Drawdown & Risk Compared

Compare the best small cap funds in India — Nippon India, SBI, Kotak, Axis and HDFC Small Cap. Live NAV, 5Y returns, AAUM, maximum drawdown and Sharpe ratio. Includes fund-level performance risk analysis. Free education on RightAdvise.

5Funds Compared
₹1.78 L CrCombined AAUM
05 Jun 2026Data As Of
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✓ All data pulled live from RightAdvise database  ·  NAV updated daily  ·  AAUM from latest AMFI quarterly filing  ·  Returns calculated from daily NAV history
Comparison

Top 5 Small Cap Funds — At a Glance

Sorted by 5-year CAGR. Click any fund for full analysis — rolling returns, drawdown chart, NAV history and risk ratios.

1
Nippon India Small Cap Fund
Nippon India MF  ·  India's largest small cap fund · Broad diversification across hundreds of small cap stocks
NAV
₹194.79
1Y Return
+4.0%
3Y CAGR
+19.4 % p.a.
5Y CAGR
+21.5 % p.a.
AAUM
₹65.6K Cr
Risk
Very High
Deep Dive →
2
Axis Small Cap Fund
Axis MF  ·  Quality-focused · Lower portfolio count · High conviction small cap bets
NAV
₹124.48
1Y Return
+2.9%
3Y CAGR
+16.8 % p.a.
5Y CAGR
+17.9 % p.a.
AAUM
₹25.5K Cr
Risk
Very High
Deep Dive →
3
HDFC Small Cap Fund
HDFC MF  ·  Value-oriented approach · Invests in companies with strong fundamentals at reasonable prices
NAV
₹152.20
1Y Return
-1.1%
3Y CAGR
+15.0 % p.a.
5Y CAGR
+17.7 % p.a.
AAUM
₹36.3K Cr
Risk
Very High
Deep Dive →
4
Kotak Small Cap Fund
Kotak MF  ·  Research-driven stock selection · Disciplined approach to small cap investing
NAV
₹300.61
1Y Return
-0.6%
3Y CAGR
+14.6 % p.a.
5Y CAGR
+15.0 % p.a.
AAUM
₹16.3K Cr
Risk
Very High
Deep Dive →
5
SBI Small Cap Fund
SBI MF  ·  Consistent long-term outperformer · Selective high-conviction portfolio
NAV
₹194.52
1Y Return
+0.1%
3Y CAGR
+13.4 % p.a.
5Y CAGR
+14.5 % p.a.
AAUM
₹34.3K Cr
Risk
Very High
Deep Dive →
Performance

₹1 Lakh Invested — How It Grew

If you had invested ₹1 lakh 5 years ago in each fund, here is how much it would be worth today. Calculated from 5 years of daily NAV in the RightAdvise database.

5-Year Growth of ₹1 Lakh Direct Plan · Growth Option · All funds rebased to ₹1,00,000
Data Table

Full Comparison Table

💡 What is AAUM? AAUM stands for Average Assets Under Management — the average value of all investor money a fund managed during a specific quarter. Reported to SEBI every quarter via AMFI. More reliable than a single-day AUM snapshot.

FundNAVAAUM1Y Return 3Y CAGR 5Y CAGR 10Y CAGR Max Drawdown Sharpe (3Y)
Nippon India Small Cap Fund ₹194.79 2026-06-04 ₹65.6K Cr Jan–Mar 2026 +4.0% +19.4 % p.a. +21.5 % p.a. +21.9 % p.a. -48.6% 0.95
Axis Small Cap Fund ₹124.48 2026-06-04 ₹25.5K Cr Jan–Mar 2026 +2.9% +16.8 % p.a. +17.9 % p.a. +19.5 % p.a. -34.6% 0.80
HDFC Small Cap Fund ₹152.20 2026-06-04 ₹36.3K Cr Jan–Mar 2026 -1.1% +15.0 % p.a. +17.7 % p.a. +18.5 % p.a. -48.3% 0.68
Kotak Small Cap Fund ₹300.61 2026-06-04 ₹16.3K Cr Jan–Mar 2026 -0.6% +14.6 % p.a. +15.0 % p.a. +18.0 % p.a. -40.6% 0.69
SBI Small Cap Fund ₹194.52 2026-06-04 ₹34.3K Cr Jan–Mar 2026 +0.1% +13.4 % p.a. +14.5 % p.a. +19.0 % p.a. -40.3% 0.53
⚠️ Data Note: Returns (what is CAGR?) calculated from daily NAV data in RightAdvise database. AAUM from official AMFI quarterly filings. Max Drawdown calculated over full available NAV history. Sharpe Ratio uses 3-year daily NAV and 6.5% risk-free rate. Educational purposes only. Past performance does not guarantee future returns.
Education

What Are Small Cap Funds?

As per SEBI, small cap companies are ranked 251st and beyond by full market capitalisation in India. Small cap mutual funds must invest at least 65% of their assets in these companies at all times. AMFI publishes the market cap rankings every six months.

Small cap companies are ranked 251st and beyond by market capitalisation — smaller, earlier-stage businesses compared to mid and large caps. Many are relatively undiscovered, less covered by analysts, and operate in niche sectors. This creates the potential for significant price discovery and returns when their businesses scale up. A small cap fund comparison across multiple funds is essential before investing — because drawdown history, maximum drawdown during crashes like March 2020, and recovery speed vary significantly between funds.

Looking at Nippon India Small Cap Fund's drawdown, performance risk or maximum drawdown? Or comparing SBI Small Cap Fund vs HDFC Small Cap Fund? The comparison table on this page shows all five funds side by side — 5-year CAGR, max drawdown (including the COVID-19 crash), Sharpe ratio and AAUM — so you can do a proper small cap fund comparison India investors need before making a decision.

✅ Why Consider Small Cap Funds

  • Highest long-term return potential of any equity mutual fund category
  • Access to India's next generation of businesses — companies before they become large caps
  • Less efficient pricing than large caps — more opportunities for skilled fund managers
  • Broad universe — 251st rank onwards includes hundreds of listed companies
  • Participation in India's economic growth at the grassroots level
  • Strong diversification within the portfolio across many small companies

⚠️ Key Risks to Know

  • Highest volatility of any equity category — can fall 50 to 70% in severe bear markets
  • Very long recovery periods — may take 3 to 5 years to recover after sharp falls
  • Liquidity risk — small cap stocks are harder to buy/sell in large quantities
  • Requires minimum 7 to 10 year investment horizon — short-term investment is extremely risky
  • Many small cap companies can fail or see permanent capital loss
  • Many top funds restrict fresh investments during bull markets due to deployment challenges

✅ Suitable For

  • Young investors with 10+ year investment horizons and very high risk tolerance
  • Those who already have a large cap or flexi cap core portfolio and want a high-growth satellite
  • Investors who understand and accept the possibility of 50%+ temporary falls in NAV
  • Those who can stay invested and not panic-sell during extended bear markets

❌ May Not Be Suitable For

  • Conservative investors or anyone with low risk tolerance
  • Those with investment horizons under 7 years
  • First-time mutual fund investors — start with large cap or flexi cap funds first
  • Anyone who cannot afford to see their investment halve in value temporarily

⚠️ Important — Some Small Cap Funds Restrict Fresh Investments

During strong bull markets, some small cap funds temporarily stop accepting lump sum investments or SIPs from new investors. This happens because the fund has grown very large and deploying fresh money in small cap stocks (which are less liquid) without moving prices becomes difficult. This is a sign of responsible fund management, not a problem. Check each fund's current investment status before proceeding.

📖 Learn the Metrics
CAGR, Sharpe Ratio, Sortino & Std Dev — Explained
What do these numbers actually mean? Read before you invest.
📖 Learn the Metrics
Drawdown & Rolling Returns — Explained Simply
Why max drawdown and rolling returns reveal more than CAGR.
Common Questions

Small Cap Fund FAQs

Nippon India Small Cap Fund is India's largest small cap fund by AUM with broad diversification across hundreds of small companies. Its maximum drawdown during the March 2020 COVID-19 crash was significant — as with all small cap funds. However, its recovery and subsequent performance has been strong. The fund's full drawdown history, Sharpe ratio and 5-year return are shown in the comparison table above. Always review maximum drawdown data before investing in any small cap fund.
SBI Small Cap Fund is known for consistent long-term outperformance with a selective, high-conviction portfolio — it has periodically restricted fresh investments due to deployment constraints, which is a sign of responsible fund management. HDFC Small Cap Fund follows a value-oriented approach, seeking companies with strong fundamentals at reasonable prices. Both have delivered strong 5-year returns. Compare their actual returns, max drawdown and Sharpe ratio in the table above before deciding. Past performance does not guarantee future results.
When doing a small cap fund comparison in India, focus on these metrics in order: (1) Maximum drawdown — how much did the fund fall during the worst crash? (2) 5-year CAGR — long-term return, not just recent 1-year performance. (3) Sharpe ratio — return per unit of risk taken. (4) AAUM — fund size matters in small caps, as very large funds may face deployment challenges. (5) Expense ratio — lower is better. All these are shown side by side for all five funds on this page.
A minimum of 7 years is recommended, though 10+ years is strongly preferred. Small cap funds can be depressed for 2 to 5 years after a major market correction before recovering. Anyone investing with a horizon shorter than 5 years should avoid small cap funds entirely.
AAUM (Average Assets Under Management) is the average corpus of the fund across an entire quarter, as officially reported to AMFI. All AUM data on RightAdvise is from official AMFI quarterly AAUM disclosures — the same data filed by AMCs with SEBI.
⚠️ RightAdvise.com is NOT registered with SEBI. All content is for educational purposes only. Mutual Fund investments are subject to market risks. Please read all scheme-related documents carefully and consult a SEBI-registered investment advisor before investing.
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