Jul 24, 2018 4 min read

Top 5 Best Small Cap Funds

Everything you need to know about the top recommended small-cap funds 2018.
We all know that small-cap mutual funds are opted for substantial returns at the expense of high risk. They follow the most aggressive style of investing, but every scheme has a different style, aim, and potential; hence it is essential to acknowledge the details of every single scheme to pick the best one for oneself.

Best 5 Small Cap Funds for 2018

  • Reliance Small Cap Fund
  • SBI Small Cap Fund
  • L&T Emerging Businesses Fund
  • HDFC Small Cap Fund
  • Aditya Birla Sun Life Small Cap Fund

To make the task easier for our investors, we have prepared a detailed description of the top recommended schemes given by our team of financial experts. It’s time you too choose the best one for yourself.

  1. Reliance Small Cap Fund
    It is a prominent small-cap fund which possesses extreme behaviour whether it is in form of risks or returns. The annualised returns in the last five years have been above 35%, and since inception, 20.42% has been generated. The 3-year rolling returns have been well above the category’s average, hence this fund is one of the best concerning the returns. It has high beta and SD and has shown the highest downfall of 21.04% in the last three years. The portfolio is highly oriented towards equity instruments of mid and small-cap companies, and a small proportion of 1.22% is allocated in large-cap companies. Reliance Small Cap Fund is highly aggressive and is suitable for the investors with very high-risk appetite.

  2. SBI Small Cap Fund
    This fund has been one of the best performers in the past and has generated an annualised return of 34.51% and 20.58% in the last 5 and three years, respectively. The rolling returns have been excellent and above its benchmark and peers. The beta and SD of the scheme are nearly equal to that of the category, hence the risk is slightly lower in this scheme. SBI Small Cap Fund has a vast scope of growth in the bull market, but the risk is moderate in the bear market. The portfolio allocation is risk-oriented where more than 80% of the corpus is allocated in small and mid-cap companies, and 2.19% is also invested in micro-cap companies. It is suitable for aggressive investors.

  3. L&T Emerging Businesses Fund
    It is a new entrant in the small-cap categories. Since its inception in 2015, it has generated an annualised return of 26.55%. It has produced the highest rolling return in its category for the last three years. Both SD and Beta have been high, and the fund has shown a drawdown of 19%. It is highly volatile and can generate the very high return in the favourable market. L&T Emerging Businesses Fund possesses a moderate risk with a good performance and rich portfolio which make it one of the best-recommended funds in its category.

  4. HDFC Small Cap Fund
    The performance of this fund has been improved in the recent years and has made it among the top performing small cap funds. The return since launch has been 15.79%. Though the fund was unable to match its peers between 2013 - 2016, but later on it bounced back with surplus returns. It is a high-risk fund and possesses high beta and SD. In the adverse market, the fund has provided lesser returns than the category average, but in the favourable market, high yields have been generated. The profit margin of the fund is moderate due to orientation in IT and Pharmaceutical sector. The experts recommend HDFC Small Cap Fund due to its past performance and risk-adjusted returns.

  5. Aditya Birla Sun Life Small Cap Fund
    It is the oldest small cap fund, and hence the annualised returns since launch is 13.20%. The fund has performed well in recent years, and the rolling returns have been well above its benchmark and category’s average. 2017 was the golden year for Aditya Birla Sun Life Small Cap Fund. The market has always impacted the fund greatly, and it has a high Beta and SD. The returns in the favourable market have been dramatically well. The portfolio has low valuations and high credit risk which makes it a high risk-oriented fund. The returns have been consistent and moderate which brought this among the top recommended small-cap funds.


Aggressive investors opt for Small-cap funds with an aim to accrue high returns, but as inferred from the above-descriptions, every scheme has different investment strategy and style. Hence, a scheme which fulfills all the financial goals of one investor may or may not be suitable for another investor. It is crucial to analyze the fund’s details before investing. To know more about the top recommended small-cap schemes, watch https://www.youtube.com/watch?v=LoO3L6jbYB4. Investors can also reach out to our financial experts directly who can assist them gladly regarding investment in small-cap funds.

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