Discover the top 10 mutual funds with explosive 10-year returns ranging from 341% to 655%. Uncover the best performers for long-term wealth growth.
Small-cap mutual funds have emerged as a powerful investment avenue for those seeking high growth potential. By investing in companies with smaller market capitalizations, these funds offer the opportunity for substantial returns, albeit with higher volatility. In this guide, we delve into the top-performing small-cap mutual funds that have delivered over 15% Compound Annual Growth Rate (CAGR) over the past 10 years. Each fund is analyzed based on its performance, investment strategy, suitability, and risk factors to aid investors in making informed decisions. These Top 10 Mutual Funds given explosive 10-Year growth with 341% to 655% absolute returns.
1. ICICI Prudential Small Cap Fund
Description: This fund aims to generate long-term capital appreciation by predominantly investing in equity and equity-related securities of small-cap companies.
Returns (CAGR):
-
1-Year: 6.92%
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3-Year: 21.83%
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5-Year: 37.47%
- 10-Year: 15.99%
Absolute Returns (10-Year): Approximately 341%
Investor Suitability: Ideal for investors with a high-risk appetite seeking substantial long-term growth through exposure to small-cap equities.
Risk Factor: Very High. The fund’s focus on small-cap stocks entails significant volatility and potential for sharp fluctuations in value.
2. Franklin India Smaller Companies Fund
Description: This fund focuses on investing in smaller companies with high growth potential, aiming to provide long-term capital appreciation.
Returns (CAGR):
-
1-Year: 5.65%
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3-Year: 28.37%
-
5-Year: 37.99%
- 10-Year: 17.17%
Absolute Returns (10-Year): Approximately 388%
Investor Suitability: Suitable for investors looking to capitalize on the growth potential of smaller companies and willing to accept higher risk for higher returns.
Risk Factor: Very High. Investments in smaller companies can be more volatile and less liquid than larger companies.
3. DSP Small Cap Fund
Description: This fund seeks to generate long-term capital appreciation by investing primarily in equity and equity-related securities of small-cap companies.
Returns (CAGR):
-
1-Year: 17.45%
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3-Year: 23.62%
-
5-Year: 36.38%
- 10-Year: 17.89%
Absolute Returns (10-Year): Approximately 419%
Investor Suitability: Best suited for investors with a long-term investment horizon and a high tolerance for market volatility.
Risk Factor: Very High. The fund’s investments in small-cap stocks can lead to significant price fluctuations.
4. Kotak Small Cap Fund
Description: This fund aims to generate capital appreciation by investing predominantly in small-cap companies with high growth potential.
Returns (CAGR):
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1-Year: 8.80%
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3-Year: 20.50%
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5-Year: 37.07%
- 10-Year: 19.05%
Absolute Returns (10-Year): Approximately 472%
Investor Suitability: Ideal for investors aiming for long-term wealth creation through investments in emerging small-cap companies.
Risk Factor: Very High. Small-cap investments are subject to higher market volatility and liquidity risks.
5. HDFC Small Cap Fund
Description: This fund focuses on generating long-term capital appreciation by investing in a diversified portfolio of small-cap companies.
Returns (CAGR):
-
1-Year: 10.83%
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3-Year: 27.18%
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5-Year: 38.27%
- 10-Year: 19.38%
Absolute Returns (10-Year): Approximately 488%
Investor Suitability: Suitable for investors seeking significant long-term growth and willing to accept the higher risks associated with small-cap investments.
Risk Factor: Very High. The fund’s focus on small-cap stocks can result in substantial volatility.
6. Axis Small Cap Fund
Description: This fund aims to provide long-term capital appreciation by investing in a diversified portfolio of small-cap companies.
Returns (CAGR):
-
1-Year: 15.01%
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3-Year: 23.39%
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5-Year: 33.69%
- 10-Year: 19.87%
Absolute Returns (10-Year): Approximately 512%
Investor Suitability: Ideal for investors with a long-term investment horizon seeking exposure to high-growth small-cap companies.
Risk Factor: Very High. Investments in small-cap stocks can be subject to significant market volatility.
7. HSBC Small Cap Fund
Description: This fund seeks to achieve long-term capital growth by investing primarily in small-cap companies with strong growth potential.
Returns (CAGR):
-
1-Year: 5.65%
-
3-Year: 25.08%
-
5-Year: 38.47%
- 10-Year: 19.89%
Absolute Returns (10-Year): Approximately 514%
Investor Suitability: Suitable for investors aiming for substantial long-term capital appreciation through investments in small-cap stocks.
Risk Factor: Very High. The fund’s investments in small-cap companies can lead to increased volatility and risk.
8. SBI Small Cap Fund
Description: This fund aims to provide investors with opportunities for long-term growth in capital by investing predominantly in a well-diversified basket of equity stocks of small-cap companies.
Returns (CAGR):
-
1-Year: 5.87%
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3-Year: 20.20%
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5-Year: 32.07%
- 10-Year: 20.21%
Absolute Returns (10-Year): Approximately 530%
Investor Suitability: Ideal for investors seeking long-term capital growth through investments in small-cap equities.
Risk Factor: Very High. Investments in small-cap stocks are subject to higher market volatility and risk.
9. Quant Small Cap Fund
Description: This fund focuses on generating long-term capital appreciation by investing in a diversified portfolio of small-cap companies.
Returns (CAGR):
-
1-Year: 2.25%
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3-Year: 28.94%
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5-Year: 50.20%
- 10-Year: 20.35%
Absolute Returns (10-Year): Approximately 537%
Investor Suitability: Suitable for aggressive investors aiming for high returns through investments in small-cap stocks.
Risk Factor: Very High. The fund’s focus on small-cap equities entails significant market risk and volatility.
10. Nippon India Small Cap Fund
Description: This fund aims to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of small-cap companies.
Returns (CAGR):
-
1-Year: 7.38%
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3-Year: 28.67%
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5-Year: 41.37%
- 10-Year: 22.40%
Absolute Returns (10-Year): Approximately 655%
Investor Suitability: Ideal for investors seeking long-term growth through exposure to small-cap equities.
Risk Factor: Very High. Investments in small-cap stocks can be highly volatile and are subject to market risks.
🔍 Summary of Top 10 Mutual Funds (Small Cap) with Explosive 10-Year Growth
| Scheme Name | 1Y Return | 3Y Return | 5Y Return | 10Y CAGR | 10Y Absolute Return (%) | ₹1 Lakh Turns Into |
|---|---|---|---|---|---|---|
| ICICI Prudential Small Cap Fund | 6.92% | 21.83% | 37.47% | 15.99% | 341% | ₹4,40,763 |
| Franklin India Smaller Companies Fund | 5.65% | 28.37% | 37.99% | 17.17% | 388% | ₹4,87,713 |
| DSP Small Cap Fund | 17.45% | 23.62% | 36.38% | 17.89% | 419% | ₹5,18,525 |
| Kotak Small Cap Fund | 8.80% | 20.50% | 37.07% | 19.05% | 472% | ₹5,71,866 |
| HDFC Small Cap Fund | 10.83% | 27.18% | 38.27% | 19.38% | 488% | ₹5,87,917 |
| Axis Small Cap Fund | 15.01% | 23.39% | 33.69% | 19.87% | 512% | ₹6,12,499 |
| HSBC Small Cap Fund | 5.65% | 25.08% | 38.47% | 19.89% | 514% | ₹6,13,521 |
| SBI Small Cap Fund | 5.87% | 20.20% | 32.07% | 20.21% | 530% | ₹6,30,095 |
| Quant Small Cap Fund | 2.25% | 28.94% | 50.20% | 20.35% | 537% | ₹6,37,472 |
| Nippon India Small Cap Fund | 7.38% | 28.67% | 41.37% | 22.40% | 655% | ₹7,54,769 |
📊 Summary
The table above showcases the top 10 mutual funds (Small Cap) in India that have delivered explosive growth over the past decade. While the Nippon India Small Cap Fund leads the pack with a staggering 655% absolute return, even the lowest performer, ICICI Prudential Small Cap Fund, more than quadrupled investors’ wealth in 10 years. These funds, despite short-term volatility, have demonstrated robust long-term compounding potential, making them appealing options for aggressive, long-horizon investors seeking to grow capital significantly.
While small cap mutual funds can deliver exceptional long-term returns as seen with returns ranging from 341% to 655% over 10 years – it’s important to understand that high returns often come with high risk. Small cap stocks are more volatile and can experience sharp fluctuations in the short term due to market cycles, lower liquidity, and limited financial resilience during economic downturns.
Therefore, investing in small cap funds requires a strong risk appetite and a long-term investment horizon of at least 7–10 years. Financial advisors typically recommend allocating only 10% to 20% of your total investment portfolio to small cap funds, depending on your age, goals, and risk profile. These funds are best suited for young investors, aggressive wealth builders, and those with a long investment timeline who can withstand market volatility without panic-selling during downturns.
Frequently Asked Questions (FAQs)
1. What are small cap mutual funds?
Small cap mutual funds invest in companies with relatively small market capitalizations. These companies are typically in their growth phase and have the potential to deliver high returns but also come with higher volatility.
2. Why do small cap funds offer higher returns over the long term?
Small cap companies often grow faster than large established firms. As they expand, the stock prices can appreciate significantly, delivering high compounded returns over time.
3. Are small cap mutual funds risky?
Yes, small cap funds are considered high-risk due to their sensitivity to market fluctuations, lower liquidity, and vulnerability to economic downturns. They may underperform during bearish markets.
4. What is the ideal investment horizon for small cap mutual funds?
A minimum investment horizon of 7–10 years is recommended to smooth out volatility and benefit from the long-term growth potential of small cap companies.
5. How much of my portfolio should I allocate to small cap funds?
Financial experts generally advise limiting small cap exposure to 10%–20% of your overall mutual fund portfolio, depending on your risk tolerance and investment goals.
6. Who should invest in small cap mutual funds?
Small cap funds are suitable for young investors, aggressive investors, and those with a long-term perspective who can handle short-term volatility without panic.
7. How do I evaluate small cap mutual fund performance?
Key indicators include CAGR (Compounded Annual Growth Rate) over different time frames (1Y, 3Y, 5Y, 10Y), absolute returns, fund consistency, and risk-adjusted returns.
8. Which small cap mutual fund delivered the highest 10-year return?
According to the data, Nippon India Small Cap Fund – Direct Plan – Growth provided the highest return of 655%, turning ₹1 lakh into ₹7.54 lakhs over 10 years.
9. Can SIPs be used to invest in small cap funds?
Yes, Systematic Investment Plans (SIPs) are an effective way to invest in small cap funds, helping mitigate timing risk and manage volatility through rupee cost averaging.
10. How do I start a SIP? You can start online through platforms like Zerodha Coin, Groww, Paytm Money, or directly with AMCs.
Disclaimer:
The CAGR returns provided for each mutual fund are based on data as of June 02, 2025, which is the date this article was written. Investing in mutual funds is subject to market risks. Read all scheme-related documents carefully. Past performance is not indicative of future results. Please consult your financial advisor before making any investment decisions.