LIC, Bandhan, Motilal Oswal among top 10 small-cap funds delivers 30%+ returns

In an impressive performance for 2024, approximately 10 small-cap mutual funds have delivered returns exceeding 30%, according to an analysis of the category. Out of 27 small-cap funds tracked this year, four achieved returns of over 40%, with Bandhan Small Cap Fund leading the way at a remarkable 47.73%.

Among the top performers, the Motilal Oswal Small Cap Fund and LIC MF Small Cap Fund posted returns of 46.89% and 41.82%, respectively. Invesco India Smallcap Fund and ITI Small Cap Fund also impressed with returns of 40.43% and 38.11%.

Other notable mentions include Tata Small Cap Fund and Bank of India Small Cap Fund, which yielded returns of 36.04% and 35.77%, respectively. The Mahindra Manulife Small Cap Fund delivered 32.20%, while the Nippon India Small Cap Fund, the largest in its category, returned 30.39%.

Several funds, however, fell short of their benchmarks. The average return for small-cap funds stood at 30.49%, slightly underperforming the Nifty Smallcap 250 - TRI, which provided 31.01%, and the BSE 250 Small Cap - TRI, which offered 29.23%.

Top Performers:

Bandhan Small Cap Fund: 47.73%

Motilal Oswal Small Cap Fund: 46.89%

LIC MF Small Cap Fund: 41.82%

Invesco India Smallcap Fund: 40.43%

ITI Small Cap Fund: 38.11%

Tata Small Cap Fund: 36.04%

Bank of India Small Cap Fund: 35.77%

Mahindra Manulife Small Cap Fund: 32.20%

Nippon India Small Cap Fund: 30.39%

Benchmark Performance:

Nifty Smallcap 250 - TRI: 31.01%

BSE 250 Small Cap - TRI: 29.23%

Underperformers: While many funds performed admirably, some lagged behind their benchmarks. Notable underperformers include the Nippon India Small Cap Fund and the Franklin India Smaller Cos Fund, which failed to surpass their respective benchmarks.

Investment Insights: Investing in small-cap funds is inherently risky due to the volatility of small company stocks. These investments are suitable for aggressive investors with a high-risk appetite and a long-term horizon, typically between seven to ten years. New and inexperienced investors are advised to steer clear of small-cap schemes due to their inherent risks and potential for short-term volatility.

2024 proved to be a rewarding year for small-cap mutual funds, with several funds offering substantial returns and outperforming benchmarks, demonstrating the potential high rewards of this high-risk investment category.