- India’s mutual fund industry sees significant household investment growth.
- Retail participation and SIPs drive mutual fund folio growth.
- Small cap funds gain popularity for high-growth, long-term potential.
India’s Mutual Fund industry has become an important pillar of household investing, helping millions of investors participate in the country’s growth story. Rising financial awareness, greater access to digital investment platforms and a growing preference for market-linked products have encouraged more individuals to move beyond traditional savings options.
Retail Participation Continues To Rise
The total number of accounts, or folios in mutual fund terminology, stood at 27.66 crore (276.6 million) as on May 31, 2026. Meanwhile, the number of folios under equity, hybrid and solution-oriented schemes, where retail investors account for the majority of investments, reached about 21.10 crore (211.0 million). Another notable trend has been the continued rise in systematic investment plans (SIPs). Monthly SIP inflows have been touching record levels.
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Why Small Cap Funds Are Attracting Investors
Among the various mutual fund categories, small cap funds have emerged as one of the favourites among Indian investors. These funds invest primarily in smaller listed companies that are often at an early stage of their growth journey. While small cap funds are generally considered riskier than Large-Cap and flexi cap funds due to higher volatility, they also offer the potential for superior returns over the long term. Investors willing to tolerate short-term fluctuations often view the category as an opportunity to participate in the next generation of high-growth businesses.
What A Rs 1,000 Monthly SIP Delivered
A comparison of leading small cap funds demonstrates the wealth-creation potential of disciplined investing through SIPs. Assuming a monthly SIP of Rs 1,000 for five years, an investor would have contributed a total of Rs 60,000.
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Top Performing Small Cap Funds In 2026: A Five-Year SIP Comparison
Scheme Name AUM (Rs crore) Expense Ratio (%) Amount Invested (Rs) Current Value (Rs) Annualised Return (%)
Bandhan Small Cap Fund Regular Growth 27,172.99 1.59 60,000 1,00,130 21.21
Invesco India Small Cap Fund Regular Growth 11,700.80 1.73 60,000 97,150 19.93
ITI Small Cap Fund Regular Growth 3,057.66 1.92 60,000 96,737 19.75
Bank of India Small Cap Fund Regular Growth 2,313.66 2.04 60,000 95,154 19.05
Quant Small Cap Fund Regular Growth 31,913.65 1.58 60,000 91,827 17.56
(“Disclaimer: This article uses information originally published by Dalal Street Investment Journal (DSIJ). The views expressed are those of the original authors and not necessarily of ABP Network Pvt. Ltd. This content is provided for general informational and educational purposes only and should not be construed as investment, financial, legal or tax advice. Readers are advised to conduct their own research and/or consult a qualified financial advisor before making any investment decisions. This content is for informational purposes only and should not be treated as investment advice. ABP Network, its employees and associates shall not be responsible or liable for any losses or damages arising directly or indirectly from the use of or reliance on this article or any information contained herein.”)
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