Top 5 Best Small Cap Funds to invest in 2018 in India

Top 5 Best Small Cap Funds to invest in 2018 in India-minTop 5 Best Small Cap Funds to invest in 2018 in India


Stock Markets are volatile now. Midcap and small cap stocks have taken a beating in the last few quarters. While large cap mutual funds provide stable returns to investors in the long term,  mid cap and small cap mutual funds can provide amazing returns in short term to long term. Small Cap Funds invest in multi bagger stocks that has potential to get very high returns in short to medium term. These carry a high risk as they invest in Small Cap stocks. Which are the Top 5 Best Small Cap Mutual funds to invest in India in 2018?  Who can invest in these Small Cap Mutual Funds? I would provide some insights about some of the Best Small Cap mutual funds.

Also read: Best Performing Mutual Fund Schemes to invest in 2018

Top 5 Best Small Cap Funds to invest in 2018 in India


These Top and Best Small Cap Mutual Funds in India have been analyzed and shortlisted based on some of the key parameters.

1) Funds are picked based on highest returns received in the last 1 to 5 years.

2) These funds are ranked based on 1, 3 and 5 years returns which indicates that such funds perform well in medium to long run.

3) Picked up the funds, which are rated by Crisil as Rank-1, Rank-2 and Rank-3 which indicates good fundamentals in the small cap mutual funds segment.

4) Value research (VRO) rated these mutual funds as 5 star, 4 star and 3 star.

5) AUMs (Assets under management) > 800 Crores. This proves investor confidence among these top mutual funds.

Some of the funds were earlier investing in small cap stocks and some amount in Midcap too.  The naming conversion had both Midcap and smallcap names. As per recent reclassification of SEBI, these are renamed clearly as small cap funds. Hence some portion earlier would have been invested in Midcap funds which would not happen in future.

Who should invest in these Small Cap Funds?


Small cap funds invest in small companies that has potential to grow. These funds invest majorly in Small Cap stocks and to some extent in other stocks. Since these invests in Small Cap stocks, the returns from such funds would be highly volatile. Some of the small cap stocks can erode your capital. However, on the other side, such stocks can double or triple your money in just a few years. Hence, instead of investing in Small Cap stocks, it is better to invest in Small Cap funds which would invest in a diversified portfolio of Small Cap stocks and such volatility would be minimized.

In net summary, investing around 20% of your portfolio in such Small Cap funds can make your portfolio “high risk, high return” in medium to long term to that extent. Investors who are high risk to moderate risk takers can invest in such Small Cap funds for 5-10 year period. They can invest in SIP or lump sum (when markets are taking correction).

Top 5 Best Small Cap Funds to invest in 2018 in India


Top#1 – Reliance Small Cap Fund

This scheme aims to generate capital appreciation by investing in smaller companies. This is just 5 years old scheme. However, in these 5 years, it has beaten its peers with high returns.

Fund Performance: This fund has beaten its benchmark and provided 36% annualised returns in last 5 years. This fund gave 11% returns in the last 1 year and 22% annualized returns in the last 3 years. If one would have invested Rs 1,000 per month through SIP in this small cap fund for 5 year period, the investment would have been Rs 60,000 (1,000 x 60 months) and the fund value now would have been Rs 120,000. If you would have invested Rs 1 Lakh, 3 years back, your fund value now would have been Rs 1.8 Lakhs. If you would have invested Rs 1 Lakh, 5 years back, your fund value now would have been Rs 4.6 Lakhs.

Why to invest: This fund has beaten its peers and given highest returns in the last 5 years. This fund is rated by Crisil as Rank-3 and Value Research Online as 4 Star. This is one of the best small cap mutual fund schemes to invest in 2018 now.

Top#2 – SBI Small Cap Fund


The mutual fund scheme aims long-term capital appreciation by investing in a diversified portfolio of small & Midcap stocks.

Fund Performance: This fund has beaten its benchmark and provided 35% annualised returns in last 5 years. This fund gave 19% returns in the last 1 year and 21% annualized returns in the last 3 years. If one would have invested Rs 1,000 per month through SIP in this small cap fund for 5 year period, the investment would have been Rs 60,000 (1,000 x 60 months) and the fund value now would have been Rs 123,000. If you would have invested Rs 1 Lakh, 3 years back, your fund value now would have been Rs 1.8 Lakhs. If you would have invested Rs 1 Lakh, 5 years back, your fund value now would have been Rs 4.4 Lakhs.

Why to invest: This fund has beaten its peers and given highest returns in the last 5 years among small cap funds segment. This fund is rated by Crisil as Rank-2 and Value Research Online as 5 Star. This is one of the top small cap mutual fund to invest now.

Also Read: Best Rural Theme Mutual Fund Schemes in 2018

Top#3 – Franklin India Smaller Cos fund


The scheme aims to provide long-term capital appreciation by investing in mid and small cap companies. Normally, it would invest at least 75 per cent of its assets in smaller companies.

Fund Performance: This fund has beaten its benchmark and provided 29% annualised returns in last 5 years. This fund gave 6% returns in the last 1 year and 16% annualized returns in the last 3 years. If one would have invested Rs 1,000 per month through SIP in this small cap fund for 5 year period, the investment would have been Rs 60,000 (1,000 x 60 months) and the fund value now would have been Rs 105,000. If you would have invested Rs 1 Lakh, 3 years back, your fund value now would have been Rs 1.5 Lakhs. If you would have invested Rs 1 Lakh, 5 years back, your fund value now would have been Rs 3.5 Lakhs.

Why to invest: This fund has beaten its peers and given 3rd highest returns in the last 5 years. This fund is rated by Crisil as Rank-3 and Value Research Online as 3 Star. This is one of the best small cap mutual fund schemes to invest in 2018.

Top#4 – HDFC Small Cap Fund


Fund Performance: This fund has beaten its benchmark and provided 25% annualised returns in last 5 years. This fund gave 21% returns in the last 1 year and 21% annualized returns in the last 3 years. If one would have invested Rs 1,000 per month through SIP in this small cap fund for 5 year period, the investment would have been Rs 60,000 (1,000 x 60 months) and the fund value now would have been Rs 110,000. If you would have invested Rs 1 Lakh, 3 years back, your fund value now would have been Rs 1.8 Lakhs. If you would have invested Rs 1 Lakh, 5 years back, your fund value now would have been Rs 3 Lakhs.

Why to invest: This fund has beaten its peers and had given amazing returns of 21% in the last 1 year even during volatile timeframe. This fund is rated by Crisil as Rank-1 and Value Research Online as 3 Star. This is one of the best small cap mutual fund for 2018.

Top#5 – Aditya Birla Sunlife Small Cap Fund


The MF Scheme seeks to generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities of Small cap stocks.

Fund Performance: This fund has beaten its benchmark and provided 25% annualised returns in last 5 years. This fund gave 5% returns in the last 1 year and 19% annualized returns in the last 3 years. If one would have invested Rs 1,000 per month through SIP in this small cap fund for 5 year period, the investment would have been Rs 60,000 (1,000 x 60 months) and the fund value now would have been Rs 105,000. If you would have invested Rs 1 Lakh, 3 years back, your fund value now would have been Rs 1.7 Lakhs. If you would have invested Rs 1 Lakh, 5 years back, your fund value now would have been Rs 3 Lakhs.

Why to invest: This fund is rated by Crisil as Rank-3 and Value Research Online as 2 Star. This fund has outperformed even in the last 3 years. This is one of the top and best small cap mutual fund scheme to invest.

Bonus Tip – DSP Blackrock Small Cap Fund (Erstwhile DSP BR Microcap Fund)


The aim of the mutual fund scheme is to seek long-term capital appreciation by investing in a portfolio that is substantially constituted of stocks of small cap companies.

Fund Performance: This fund has beaten its benchmark and provided 32% annualised returns in last 5 years. This fund gave -5% returns in the last 1 year and 15% annualized returns in the last 3 years. If one would have invested Rs 1,000 per month through SIP in this small cap fund for 5 year period, the investment would have been Rs 60,000 (1,000 x 60 months) and the fund value now would have been Rs 110,000. If you would have invested Rs 1 Lakh, 3 years back, your fund value now would have been Rs 1.5 Lakhs. If you would have invested Rs 1 Lakh, 5 years back, your fund value now would have been Rs 3.9 Lakhs.

Why to invest: This fund is rated by Crisil as Rank-4 and Value Research Online as 3 Star. This fund has outperformed even in the last 3 years. Though the performance is not that encouraging in the last 1 year, this is one of the best small cap fund to invest now in 2018. Note that this fund is not accepting a lump sum now, but if you are investing in SIP, you can continue your SIP.

Also Read: 10 Aggressive Growth Equity Mutual Fund Schemes

Here is the summary of Top 5 Smallcap Mutual Funds to invest


List of Top 5 Best Small Cap Funds to invest in 2018 in India-min

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Suresh

Top 5 Best Small Cap Funds to invest in 2018 in India

17 Comments

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  1. Sir I want to invest RS 500 per month for 20-25 yrs.plz suggest good small cap fund

    1. Hello Surjit, You can invest in any of the 5 funds indicated in this article. All these are top performing smallcap funds.

  2. Suresh ji,

    I need your help please guide My registered e-mail id is blocked due to some unknown reason.
    And how can I update my new E-mail id in all my folios . And in CAMS and karvy and franklin.
    Is there a way to do it on line, on my own.

    Rgds,
    Munish K. Singh

    1. Hello Munish, You cannot do them in one go. But you can visit this link and do this for each and every mutual fund portfolio for updation of email ID. https://www.camsonline.com/investorservices/COL_ISRequestforUpdatingEmailandPhoneNo.aspx

      1. Many Thanks Sir

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