Even though Indian stock market’s return in the last one year has remained muted, broader market including small cap performed well, offering good returns ton investors. Nifty 50 delivered a negative 0.10 per cent return in the last one year, Sensex dropped 2.64 per cent during the period. Meanwhile, small cap and mid cap funds have delivered not only positive but in double digits.
Nifty Smallcap 250 index gained 15 per cent or 2402 points in the past six months. Data as of July 31, 2026, shows that a handful of small-cap schemes have significantly outperformed their peers over the last 12 months.
Under the small cap fund, Asset Management Companies (AMCs) invest at least 65 per cent investment in small cap stocks. These companies have high growth potential but also tend to be more volatile than large- and mid-cap stocks. As a result, these funds are generally suitable for investors with a long investment horizon and a higher risk appetite.
Before you should see top 5 highest-return smallcap funds, investors should know that they must not choose a mutual fund based only on one-year returns.
Investors should also look at long-term performance, consistency across market cycles, portfolio quality, expense ratio, fund manager’s track record, and whether the scheme matches their financial goals and risk tolerance.
Since small-cap funds can see sharp ups and downs, experts usually recommend a long-term investment horizon of at least five to seven years.
Which Are Top 5 Smallcap Mutual Funds In Terms Of Returns In Past 5 Years?
TRUSTMF Small cap fund remained the top runner in the small cap fund stock with highest 1-year return to investors by offering 26.71 per cent.
While Motilal Oswal Small Cap Fund stood at the second position with the returns at 20.17 per cent in the past one year.
The Bank of India Small Cap Fund ranked third, generating a 18.82% return over the last year. It was closely followed by the Union Small Cap Fund, which delivered 18.76%.
The difference between the two funds was marginal, highlighting that both managed to capture the gains from the broader small-cap rally while maintaining competitive performance.
Completing the top five list, the ITI Small Cap Fund posted a 15.09% return during the one-year period. While its returns were comparatively lower than the other funds in the list, it still delivered double-digit gains for investors.
| Fund | 1-Year Return |
|---|---|
| TRUSTMF Small Cap Fund | 26.71% |
| Motilal Oswal Small Cap Fund | 20.17% |
| Bank of India Small Cap Fund | 18.82% |
| Union Small Cap Fund | 18.76% |
| ITI Small Cap Fund |
15.09% |
Data is taken from Association of Mutual Funds in India (AMFI)
While these funds have emerged as the best performers over the past year, investors should remember that past returns do not guarantee future performance. A well-diversified portfolio and long-term approach remain key to successful investing.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance does not guarantee future returns.
