Top-performing small-cap mutual funds: Which schemes delivered the highest returns across 1 month, 1 year, SIPs?

Small-cap mutual funds have staged a strong comeback, with several schemes delivering robust gains over the past month as investor sentiment improved. While recent returns have been encouraging, long-term data shows disciplined SIP investors continue to be the biggest winners in the category.

Small-cap mutual funds have regained momentum over the past month, with several schemes posting sharp gains as broader equity markets recovered from recent volatility. Data from Value Research, as of July 10, 2026, shows that the best-performing small-cap funds generated returns of up to 8.40% in one month, while several schemes continued to deliver strong one-year, three-year and long-term SIP returns.

Among the 36 small-cap schemes tracked, Motilal Oswal Small Cap Fund emerged as the top performer over the past month with a return of 8.40%. It was followed by Invesco India Smallcap Fund (7.70%), Bank of India Small Cap Fund (7.70%), Axis Small Cap Fund (7.57%), Abakkus Small Cap Fund (7.37%), ITI Small Cap Fund (7.28%), Groww Small Cap Fund (7.14%) and Bajaj Finserv Small Cap Fund (6.27%).

The strong one-month performance reflects improving risk appetite among investors as domestic inflows remained healthy and broader market sentiment strengthened.

Best one-year performers

Over the past year, TRUSTMF Small Cap Fund topped the category with an impressive 24.69% return. It was followed by Motilal Oswal Small Cap Fund (15.81%), ITI Small Cap Fund (13.41%), Bank of India Small Cap Fund (16.32%), JM Small Cap Fund (12.21%), Sundaram Small Cap Fund (11.04%) and LIC MF Small Cap Fund (10.48%).

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However, the data also highlights the volatility associated with the segment. While many schemes delivered double-digit gains, HDFC Small Cap Fund (-2.43%) and Tata Small Cap Fund (-6.61%) remained in negative territory over the one-year period.

Three-year CAGR leaders

Long-term performance paints a stronger picture for the category. Bandhan Small Cap Fund delivered the highest three-year annualised return of 28.52%, followed by ITI Small Cap Fund (26.41%), Invesco India Smallcap Fund (25.17%), Mahindra Manulife Small Cap Fund (23.43%), Bank of India Small Cap Fund (22.99%) and Quant Small Cap Fund (21.24%).

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Several other funds, including DSP Small Cap Fund, Union Small Cap Fund and Nippon India Small Cap Fund, also generated annualised returns close to or above 20%, underscoring the wealth-creation potential of quality small-cap companies over longer investment horizons.

Top-performing Small-Cap Mutual Funds (as of July 10, 2026)

Category	Fund	Return
Best 1-Month Performer	Motilal Oswal Small Cap Fund	8.40%
	Invesco India Smallcap Fund	7.70%
	Bank of India Small Cap Fund	7.70%
	Axis Small Cap Fund	7.57%
	Abakkus Small Cap Fund	7.37%
Best 1-Year Performer	TRUSTMF Small Cap Fund	24.69%
	Bank of India Small Cap Fund	16.32%
	Motilal Oswal Small Cap Fund	15.81%
	ITI Small Cap Fund	13.41%
	JM Small Cap Fund	12.21%
Best 3-Year CAGR	Bandhan Small Cap Fund	28.52%
	ITI Small Cap Fund	26.41%
	Invesco India Smallcap Fund	25.17%
	Mahindra Manulife Small Cap Fund	23.43%
	Bank of India Small Cap Fund	22.99%
Best 3-Year SIP Return	ITI Small Cap Fund	19.02%
	Invesco India Smallcap Fund	18.67%
	Bank of India Small Cap Fund	18.44%
	Bandhan Small Cap Fund	17.28%
	DSP Small Cap Fund	15.64%
Best 5-Year SIP Return	Bandhan Small Cap Fund	23.12%
	ITI Small Cap Fund	22.95%
	Invesco India Smallcap Fund	22.32%
	Bank of India Small Cap Fund	20.95%
	Quant Small Cap Fund	19.48%
Best 10-Year SIP Return	Quant Small Cap Fund	25.80%
	Nippon India Small Cap Fund	22.36%
	Axis Small Cap Fund	20.67%
	Union Small Cap Fund	20.31%
	DSP Small Cap Fund	20.01%

Source: Value Research

SIP investors stay ahead

Systematic Investment Plan (SIP) investors continued to benefit from staying invested despite intermittent market corrections.

For the three-year SIP period, ITI Small Cap Fund led with 19.02% returns, followed by Bank of India Small Cap Fund (18.44%), Invesco India Smallcap Fund (18.67%), DSP Small Cap Fund (15.64%) and Bandhan Small Cap Fund (17.28%).

Over five years, Bandhan Small Cap Fund delivered the highest SIP return at 23.12%, ahead of ITI Small Cap Fund (22.95%), Invesco India Smallcap Fund (22.32%), Bank of India Small Cap Fund (20.95%) and Quant Small Cap Fund (19.48%).

For investors with a decade-long investment horizon, Quant Small Cap Fund topped the list with a 10-year SIP return of 25.80%, followed by Nippon India Small Cap Fund (22.36%), Axis Small Cap Fund (20.67%), Union Small Cap Fund (20.31%) and DSP Small Cap Fund (20.01%).

While the recent rally has improved returns across the category, financial advisers caution that small-cap funds remain among the most volatile equity investments. Investors with long-term goals and a higher risk appetite are generally advised to invest through SIPs rather than making large lump-sum investments, as staggered investing helps manage market volatility while benefiting from the long-term growth potential of smaller companies.

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