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3 Best Small Cap Equity Mutual Funds To Buy

Sunil Fernandes
·3-min read

Indian stock markets have recovered a great deal from their lows seen in the month of March 2020. At the moment, you are not getting mutual funds very cheap right to buy right now. However, if you still wish to invest, we have selected a few small cap mutual funds, which could make for good long term investment. We have based our selection on the rankings of Crisil, the past track record and the portfolio of the fund. Here are a few best small cap funds that could be worthy picks:

1. Axis Small Cap Fund

This fund is probably one of the best in terms of returns generated. The fund has given a return of near 11.25 per cent in the last 1 year and 11.75 per cent in the last five years. Axis Small Cap Fund has been rated AAA by Crisil. The growth fund has an NAV of Rs 32.14, while the dividend plan has an NAV of Rs 21.75.

The portfolio of Axis Small Cap Fund has some high quality growth stocks including names like Galaxy Surfacants, JK Cements, Aarti Industries, City Union Bank etc. The assets under management of the fund is near the Rs 2,700 crores mark. It's important to remember that small cap mutual funds can be very volatile in terms of returns as compared to largecap funds and hence one should be careful.

2. Kotak Small Cap Fund

This fund has a 4-star rating from Crisil and also a 4-star rating from Value Research. The fund has given a returns of 18.24 per cent in the last 1 year, while the 5-year returns are 9.05 per cent on an annualized basis.

One can invest in the Kotak Small Cap Fund through the Systematic Investment Investment (SIP) plan, where one can invest a small sum of Rs 1,000 each month after an initial investment of Rs 5,000.

The fund has investments in some good quality small cap stocks like JK Cement, Sheela Foam, Century Plywoods and Dixon Technologies. If you are looking to invest in the growth plan, the current NAV is Rs 77.18. The Kotak Small Cap Fund is good for those looking at long-term investment.

3. Union Small Cap Fund

Union Small Cap Fund is another great small cap equity fund that has a 4-star rating from Crisil. The 1-year returns from the fund is nearly 23 per cent, which is really very good. However, the 5-year returns is more subdued at around 6.13 per cent.

The fund has investments in stocks like Indiamart Intermesh, PI Industries, MCX, Heritage Foods and Team Lease. One can also use the SIP route to invest, where you can do so with a small sum of Rs 1,000 every month. We wish to reiterate that if you do not have an appetite for risk, it would be advisable not to invest in small cap equity mutual funds.


The article is not a solicitation to buy, sell in equity mutuals or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.

About the author

Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.

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