Best Mutual Funds: While Indian stock markets remain bullish, analysts point to small-cap mutual funds (MFs) as appealing investment possibilities. Some of these funds have generated alpha gains by consistently outperforming benchmark returns. While small-cap MF investments carry higher risks, the current market conditions, combined with these funds’ solid track records, make them compelling options.

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13 small-cap funds have delivered alpha returns over the past three years, surpassing the benchmarks set by the BSE 250 SmallCap Total Return Index (22.03%) and the NIFTY Smallcap 250 Total Return Index (22.65%) as per the data available on the AMFI website dated 3 January 2025.

At the forefront of this group are the Bandhan Small Cap Fund (29.37%), ITI Small Cap Fund (27.39%), and Invesco India Smallcap Fund (27.28%). Close behind are Nippon India Small Cap Fund (26.85%), Quant Small Cap Fund (26.61%), Tata Small Cap Fund (25.77%), and Franklin India Smaller Companies Fund (25.72%). Other funds also showed strong performance, including LIC MF Small Cap Fund (25.62%), HSBC Small Cap Fund (24.74%), Edelweiss Small Cap Fund (24.04%), Bank of India Small Cap Fund (24.02%), HDFC Small Cap Fund (23.49%), and DSP Small Cap Fund (22.21%).

These 13 small-cap funds have generated alpha returns in three years

1)Bandhan Small Cap Fund (Direct)- 29.37%

2)ITI Small Cap Fund (Direct)-27.39%

3)Invesco India Smallcap Fund (Direct)- 27.28%

4)Nippon India Small Cap Fund (Direct)- 26.85%

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5)Quant Small Cap Fund (Direct)- 26.61%

6)Tata Small Cap Fund (Direct)- 25.77%

7)Franklin India Smaller Companies Fund (Direct)- 25.72%

8)LIC MF Small Cap Fund (Direct)- 25.62%

9)HSBC Small Cap Fund (Direct)-24.74%

10)Edelweiss Small Cap Fund (Direct)- 24.04%

11)Bank of India Small Cap Fund (Direct)- 24.02%

12)HDFC Small Cap Fund (Direct)-23.49%

13)DSP Small Cap Fund (Direct)- 22.21%

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BSE 250 SmallCap Total Return Index- 22.03% return

NIFTY Smallcap 250 Total Return Index- 22.65%

While past performance does not guarantee future results, these mutual funds showcase vital track records. Pankaj Mathpal, the founder and CEO of Optima Money Managers, listed the top five small-cap mutual funds that investors should consider investing in 2025 to become rich

Best small-cap mutual funds as listed by Pankaj Mathpal

1)Motilal Oswal Small Cap

5)Mahindra Manulife Small Cap

However, before making any investment decisions, it’s crucial to conduct thorough research, consider your investment goals and risk tolerance, and consult a financial advisor.

Please note that the information provided is sourced from the Association of Mutual Funds in India (AMFI) and reflects returns as of January 3, 2024.

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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions