3 weeks ago
21 small-cap funds deliver over 15% returns in six months
Small-cap funds are savings boxes that hold shares of smaller companies.
Lately, many of these boxes have grown quickly in value.
Out of 59 small-cap funds, 21 grew by more than 15% in just six months.
If you put 100 rupees into one, you could end up with more than 115 rupees.
The Bank of India Small Cap Fund grew the most, at about 29%.
Shares of smaller companies are doing well because many people in India are putting their savings into them every month.
However, grown-up experts remind us that smaller-company shares can be bumpy and drop more than big-company shares.
In the past, they have often fallen by about 25% in a year before recovering.
That is why experts say you should keep investing for the long term and not chase quick gains.
21 out of 59 small-cap mutual funds delivered more than 15% returns in six months, according to Value Research data as of 10th August 2026.
Bank of India Small Cap Fund topped the list with a 29.07% return, beating the 11.84% benchmark by 17.23 percentage points and the 14.4% category average by 14.67 points.
The Nifty Smallcap 250 has risen nearly 30% from its 52-week low and trades just 0.24% below its 52-week high.
Small-cap funds saw net inflows of Rs 7,768 crore in July 2026, the highest among equity categories and up 39% month-on-month, while SIP flows hit a four-month high of Rs 31,961 crore.
Nifty Smallcap 250 earnings are expected to grow around 20% in FY27 and 18% in FY28, supporting the long-term outlook.
- Who
- Indian investors in small-cap mutual funds, with data from Value Research and guidance from Jasmeet Singh, Executive Director of Anand Rathi Wealth Limited.
- What
- 21 of 59 small-cap funds delivered over 15% returns in six months, led by Bank of India Small Cap Fund at 29.07%.
- Where
- India
- When
- In the six-month period covered by data published as of 10th August 2026, including July 2026 inflow figures.
- Why
- Strong momentum in the small-cap segment, valuations trading about 15% below estimated fair value, and rising domestic inflows including SIPs.
Bullish View
Cautious View
Valuation and entry point
Bullish View
The Nifty Smallcap 250 trades about 15% below its estimated fair value, making current levels a good entry point for investors.
Cautious View
Small-cap funds are inherently more volatile than large caps; historically they have seen average declines of around 25% every year, so corrections are a normal part of market cycles.
Can the momentum continue?
Bullish View
Expected earnings growth of about 20% in FY27 and 18% in FY28, along with strong SIP inflows, highlights the long-term growth potential of small caps.
Cautious View
A strong six-month performance does not guarantee the same pace will continue; surprises or disappointments in FY27 earnings or a reversal in FII flows, which turned positive only in July after four months of selling, could create short-term pressure.
Key facts
- Funds with over 15% returns
- 21 out of 59 small-cap funds in 6 months
- Top performer
- Bank of India Small Cap Fund (29.07%)
- Benchmark return
- 11.84% (Nifty Smallcap 250)
- Category average return
- 14.4%
- Small-cap fund inflows (July 2026)
- Rs 7,768 crore, up 39% month-on-month
- SIP flows (July 2026)
- Rs 31,961 crore, a four-month high
- Nifty Smallcap 250 vs 52-week high
- Trading 0.24% below its 52-week high
- Expected earnings growth
- Around 20% in FY27 and 18% in FY28
Quotes
Jasmeet Singh
Executive Director, Anand Rathi Wealth Limited
“Looking at the current valuations in Nifty Smallcap 250, we see that it is trading around 15% below its estimated fair value. Hence, as valuations appear attractive, this would serve as a good entry point to investors. However, investors should continue to focus on their long-term strategy rather than making decisions based only on short term market movements.”
financialexpress.com
“If we look at small caps over the last 25 years, they have seen average declines of around 25% every year and most of these corrections lasted only three to four months, with the market typically recovering to its previous peak within 12 to 18 months.”
financialexpress.com
Sources
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