In 2023, small-cap mutual funds were the lead performers with nearly 35 per cent average returns in the category. Small cap category of funds invests in high-growth small-cap companies albeit with high risk. Despite this top performance in 2023, March saw a Rs 94.17 crore outflow, following Sebi’'s directive to do stress tests due to "froth" concerns in small-cap space. The latest stress test results show improved liquidity among small caps, with average liquidation time dropping to 13.7 days from 14 days a month ago.
The S&P BSE SmallCap index surged by 62 per cent in one year, but slowed post-Sebi warning and reached only 9.98 per cent YTD, but still higher compared to the broader BSE Sensex (1.17 per cent) increase.
AMFI data shows 24 small-cap funds, collectively boasting an average return of 55.84 per cent over one year and 31.36 per cent over three years. They returned 28.08 per cent in 5 years, and in 10 years they managed to provide 23.11 per cent. Here is the countdown of the top five performers:
5. HSBC Small Cap Fund
HSBC Small Cap Fund is the third-highest performer in the three-year category, registering returns of 35.16 per cent. It is not among the top 5 performers in any other category but has decent returns across all other tenures. It has 54.81 per cent returns in one year and 26.45 per cent in 5 years.
The fund has not been around for 10 years but its sizable AUM (Rs 14,446 crore) highlights investor confidence.
4. Bandhan Small Cap Fund
Bandhan Small Cap Fund gave the highest return in the last year a whopping 79.87 per cent. As a new fund launched in February 2020, one cannot analyse its returns over 3 years. In 3 years the fund has returned 33.45 per cent, not among the top five performances in the small-cap space but slightly above the category average for this tenure.
3. Tata Small Cap Fund
Tata Small Cap Fund the third-best performer in the category of mutual funds has performed well in three three-year tenures and five-year tenures. In both these categories the fund clocked top 5 performances with 34.91 per cent and 29.96 per cent in three years and five years respectively.
2. Nippon India Small Cap Fund
Nippon India Small Cap Fund is the only fund in this list that clocked top five returns in every tenure from one to 10 years. The one-year return is at 63.09 per cent and it has the highest one-year return at 28.33 per cent. As the fund with the highest AUM, Rs 49,960 crore, and 3 and 5-year performances of 41.86 and 39.85 per cent, respectively, it is the perfect fit for the second spot.
1. Quant Small Cap Fund
Quant Small Cap Fund excels in its three-year tenure and five-year tenures, and across all tenures, except 10-years it has a place in the top five spots. It boasts the highest returns in the category with 41.86 per cent over the last three years and 39.85 per cent over the last five years. In the 1-year tenure, with a 75.57 per cent, the fund has shown consistency across tenures.
