Top Smallcap Mutual Funds Deliver Up To 36% SIP Returns In Five Years, See How Rs 18,000 Monthly Investment Grew

Smallcap mutual funds have become a preferred choice for investors willing to take higher risks in exchange for potentially higher rewards. By investing in companies with smaller market capitalisation, these funds often capture strong growth opportunities. However, they also carry higher volatility compared to large-cap or mid-cap schemes. According to experts, disciplined SIP investments in smallcap funds over the last five years have delivered significant wealth creation. Let’s explore the top five performers and see how an Rs 18,000 monthly SIP would have grown.

What Makes Smallcap Funds Different?

Smallcap funds primarily invest in companies with a market capitalisation of less than Rs 5,000 crore. By regulation, they must allocate at least 65 per cent of their portfolio to smallcap stocks. The growth potential of these businesses can be substantial, but the risks are equally pronounced due to their limited scale, liquidity, and exposure to market fluctuations. Experts suggest such funds are better suited for investors with a long-term horizon and high risk tolerance.

Quant Small Cap Fund: Strongest Performer

Among the top five schemes, Quant Small Cap Fund has delivered the highest five-year SIP return of around 36.5 per cent. With a fund size exceeding Rs 29,000 crore and a NAV of Rs 268.9 (as of August 29, 2025), it has rewarded investors handsomely. An SIP of Rs 18,000 per month over the past five years would have grown to nearly Rs 30.73 lakh.

Nippon India Small Cap Fund: A Consistent Favourite

The Nippon India Small Cap Fund has also maintained a strong track record. Managing assets worth approximately Rs 65,922 crore, this scheme reported SIP returns of 33.28 per cent over five years. The NAV stood at Rs 184.4 on August 29, 2025. An Rs 18,000 monthly SIP would have accumulated to around Rs 27.76 lakh during the same period.

Bandhan Small Cap Fund: Steady Growth With Discipline

The Bandhan Small Cap Fund has shown consistent growth while maintaining risk-adjusted returns. With assets under management of about Rs 14,062 crore, its five-year SIP return came in at 32.55 per cent. As of August 31, 2025, the NAV was Rs 49.23. An investor committing Rs 18,000 monthly would have built a corpus of roughly Rs 27.14 lakh in five years.

Tata Small Cap Fund: Solid Long-Term Performer

The Tata Small Cap Fund has emerged as another strong performer in this segment. Its NAV stood at Rs 44.34 as of August 29, 2025, with assets of Rs 11,576 crore. Over five years, it provided SIP returns of 31.84 per cent. A disciplined SIP of Rs 18,000 per month would have grown into approximately Rs 26.55 lakh.

Invesco India Smallcap Fund: Reliable Option for Investors

Rounding off the top five is the Invesco India Smallcap Fund, managing assets worth Rs 7,580 crore. With a NAV of Rs 45.01 (as of August 2, 2025), the scheme delivered five-year SIP returns of 31.61 per cent. An Rs 18,000 monthly SIP during this period would now be valued at nearly Rs 26.36 lakh.

Should Investors Consider Smallcap Funds Now?

According to experts, while the past five years have shown remarkable gains, smallcap funds are inherently volatile. Investors should not expect similar returns every cycle, as performance is closely tied to broader market conditions and the growth prospects of smaller companies. Those with patience, a long-term horizon, and the ability to tolerate sharp fluctuations can consider allocating part of their portfolio to this category.

The Importance of SIP Discipline

SIP (Systematic Investment Plan) remains one of the most effective ways to invest in volatile categories such as smallcap funds. It allows investors to benefit from rupee cost averaging and the power of compounding. By investing a fixed amount regularly, investors reduce the impact of market timing and build wealth steadily over time.

The past five years have highlighted the potential of smallcap mutual funds for wealth creation through SIPs. With disciplined investing, an Rs 18,000 monthly SIP in top schemes has generated wealth of over Rs 26 lakh, with the highest performer crossing Rs 30 lakh. However, experts caution that smallcap funds are not for the faint-hearted and should be chosen only after assessing risk appetite, investment goals, and time horizon.

Disclaimer: This article is for informational purposes only and should not be taken as investment advice. Returns mentioned are based on historical performance and may vary in the future. Investors are advised to consult a certified financial advisor before making investment decisions.