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5 Small-Cap Funds Topped 20% Annualised SIP Returns Over a Decade

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5 Small-Cap Funds Topped 20% Annualised SIP Returns Over a Decade

2026-08-06 08:59 UTCBy AlphaScala Research DeskSource reporting: livemint.comEditorial standards

5 Small-Cap Funds Topped 20% Annualised SIP Returns Over a Decade

Value Research data show Quant Small Cap led with 25.92% annualised SIP returns, while Union Small Cap ranked in the top five across all three windows.

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Five small-cap mutual funds generated annualised returns above 20% on systematic investment plans (SIPs) over the past 10 years, Value Research data show. For investors who kept a SIP running through several market cycles, the small-cap category delivered one of the stronger long-run payoffs in Indian mutual funds.

Quant Small Cap Fund led the decade with a 25.92% annualised return, followed by Nippon India Small Cap Fund at 22.60%. Axis Small Cap Fund delivered 20.97% and Union Small Cap Fund 20.81%. DSP Small Cap Fund rounded out the list at 20.27%. All five cleared the 20% threshold, a mark few small-cap schemes held across a full decade.

Annualised SIP returns apply to a fixed monthly contribution stream rather than a lump sum, so the figure is not comparable to the CAGR on a fund's NAV chart, and it embeds contributions made in the decade's weak stretches as well as its strong ones.

A different leaderboard emerges over five years. A sharp rally in small-cap stocks over the past few years carried a newer set of funds to the top, and the recent lists no longer resemble the decade's. The rotation in small-cap leadership is part of a broader reshuffling across equity markets that AlphaScala's stock market analysis tracks.

Bandhan Small Cap Fund led the five-year list with a 23.90% annualised SIP return, narrowly ahead of ITI Small Cap Fund at 23.80%. Invesco India Smallcap Fund came next at 22.87%, and Bank of India Small Cap Fund followed at 22.13%. Its lead over Union Small Cap Fund's five-year return is about four percentage points, a measure of how much the recent cycle has favoured the newer funds.

Those same four funds also top the three-year rankings.

Among funds with longer histories, Union Small Cap Fund and DSP Small Cap Fund stayed in the stronger half of five-year performers. Quant Small Cap Fund held its place as well. Several of the decade's top wealth creators slipped lower in the shorter-term rankings.

Union Small Cap Fund is the only scheme to rank among the top five in every window measured. It took fourth place over the full decade at 20.81%. Over five years the fund ranked fifth at 19.81%, and over three years it finished fourth at 18.40%. The ordering of those numbers puts the fund's slowest stretch in the most recent three years, a window in which even this consistent fund returned less than 20% annually.

The three-year and decade lists share exactly one top-five name. None of the other decade leaders, Quant Small Cap Fund, Nippon India Small Cap Fund, Axis Small Cap Fund or DSP Small Cap Fund, appears in the current three-year top five. One comparison shows how strong the recent cycle has been. Bandhan's five-year return of 23.90% beats the decade-long annualised figures of four of the five funds on the 10-year list; only Quant Small Cap Fund's 25.92% sits above it.

Wide gaps separate the best and weakest small-cap schemes over the decade, and within the top five alone the distance is measurable. A ₹10,000 monthly SIP, ₹12 lakh in total contributions over 10 years, would have grown to about ₹47 lakh at Quant Small Cap Fund's return and roughly ₹35 lakh at DSP Small Cap Fund's. Same plan, same market. The gap in outcomes was about ₹12 lakh, and the fund chosen carried real money.

Recent leaders have shorter records. Bandhan Small Cap Fund, ITI Small Cap Fund, Invesco India Smallcap Fund and Bank of India Small Cap Fund do not have 10 years of performance history, so their outperformance has not been tested against a full decade of market conditions. The 10-year list, the only ranking built across multiple cycles, is the one from which those four names are absent. A 10-year check on them does not exist yet.