Small-cap funds under pressure in September: Only 4 schemes deliver positive returns

Small-cap mutual funds faced a broad-based sell-off in September 2026, with only four schemes managing to post positive monthly returns. The category declined 2.59% during the month, although most funds continued to remain in positive territory over the past year.

According to Value Research data as of September 2026, Samco Small Cap Fund topped the September performance chart with a 6.20% return, followed by Bank of India Small Cap Fund at 1.12%, Tata Small Cap Fund at 0.77% and Groww Small Cap Fund at 0.20%.

The remaining funds in the category posted negative returns for the month. Quant Small Cap Fund fell 0.74%, while Bandhan Small Cap Fund declined 0.85% and ICICI Prudential Small Cap Fund lost 0.99%.

Among the larger set of funds that declined, Edelweiss Small Cap Fund recorded the steepest fall at 5.03%. UTI Small Cap Fund dropped 4.22%, while SBI Small Cap Fund fell 3.79%. Canara Robeco Small Cap Fund and Invesco India Small Cap Fund declined 3.89% and 3.30%, respectively.

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September 2026 performance of small-cap funds

Category: September 2026: -2.59% | 1-year: 9.92%
Small-cap index: September 2026: -3.12% | 1-year: 2.92%

Source: Value Research.

One-year returns remain positive for most funds

Despite the weak September performance, the broader one-year picture remained considerably stronger. The small-cap fund category delivered a 9.92% return over one year, according to the data.

Bank of India Small Cap Fund recorded the highest one-year return among the funds with available data at 29.25%, closely followed by TRUST MF Small Cap Fund at 29.14%. Motilal Oswal Small Cap Fund delivered 20.88%, while Union Small Cap Fund returned 20.55%.

ITI Small Cap Fund posted a 19.48% one-year return, followed by ABSL Small Cap Fund at 17.15% and DSP Small Cap Fund at 17.30%. Bajaj Finserv Small Cap Fund and Mahindra Manulife Small Cap Fund delivered 16.24% and 15.56%, respectively.

At the other end, HDFC Small Cap Fund was down 2.94% over one year, while Tata Small Cap Fund declined 0.28%. These were the only two schemes in the table with negative one-year returns.

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Small-cap index also declines

The weakness was not limited to actively managed funds. The small-cap index declined 3.12% in September, compared with a 2.59% fall for the small-cap fund category.

However, the index's one-year return stood at 2.92%, below the category's 9.92% return over the same period.

The September numbers highlight the volatility within the small-cap segment, where individual fund performance varied sharply even as the broader category came under pressure. The data also shows that a weak monthly performance did not necessarily erase gains accumulated over the preceding year.