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The last few months have been brutal for Indian markets. Since the last peak of September 26, 2024, the Sensex dropped 11.3 per cent while mid caps (BSE 150 Midcap TRI) tumbled 17.8 per cent. However, small caps have suffered the maximum brunt, with the BSE 250 Smallcap TRI sinking 21.3 per cent, dragging many funds down with it.
The correction, triggered largely by foreign investor outflows, separated the resilient funds from the vulnerable ones. Here's a look at the five worst-hit small-cap funds and the five that held up the best during this period:
The hardest-hit small-cap funds
| Fund name | Point-to-point returns* (%) | AUM (Rs cr) |
|---|---|---|
| Bank of India Small Cap Fund | -19.08 | 1,556 |
| Kotak Small Cap Fund | -19.68 | 16,450 |
| Quant Small Cap Fund | -19.91 | 25,183 |
| Aditya Birla Sun Life Small Cap Fund | -20.35 | 4,585 |
| Mahindra Manulife Small Cap Fund | -21.65 | 3,541 |
| *From September 26, 2024, to February 20, 2025; Only active funds considered. | ||
The most resolute small-cap funds
| Fund name | Point-to-point returns* (%) | AUM (Rs cr) |
|---|---|---|
| Motilal Oswal Small Cap Fund | -11.37 | 4,062 |
| Quantum Small Cap Fund | -12.28 | 102 |
| Invesco India Smallcap Fund | -14.61 | 5,905 |
| UTI Small Cap Fund | -14.91 | 4,351 |
| HDFC Small Cap Fund | -14.95 | 31,230 |
| *From September 26, 2024, to February 20, 2025; Only active funds considered. | ||
Lesson for you
Small-cap funds are highly volatile in the short term, and this turbulence is a stark reminder. While they offer the potential for higher returns, they also come with deeper drawdowns. Investors should limit their allocation to small-cap funds to 20-25 per cent of their portfolio, maintain a long-term horizon of at least 7-10 years, and be prepared for wild swings along the way.
Also read: I invested Rs 3 lakh in small-cap funds last year. Big mistake?
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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