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Summary: Nippon India Small Cap Fund may be one of the biggest players in the game—but some of its boldest bets are hiding in plain sight. While investors chase headline names, this fund has quietly built outsized stakes—over 8 per cent—in a handful of little-known companies you've probably never heard of. Yet, these could be the next big small-cap winners. Want to know where India’s largest small-cap fund is quietly placing its biggest bets? You might just find a future multibagger in the list.
With over Rs 66,000 crore in net assets and a portfolio spread across 260 stocks, Nippon India Small Cap Fund is the behemoth of India’s small-cap mutual fund space. It's a household name among retail investors, and with good reason. But its very size presents a unique dilemma: how do you stay nimble in a space that rewards agility?
Small-cap investing is a game of precision. Unlike large-cap funds that can lean on liquidity and index exposure, small-cap fund managers have to be both hunters and nurturers—identifying promising but under-researched companies and holding on until value is unlocked. That’s harder to do when your fund size runs into tens of thousands of crores.
Yet, Nippon India Small Cap Fund has built a strong track record, especially for investors with patience.
Short-term pain, long-term gain
Its one-year return of -4.21 per cent (as of July 2025) may not inspire confidence at first glance, perhaps a sign of how difficult it is for a large small-cap fund to deploy its assets with speed and precision.
But small-cap investing is not for the one-year investor. It demands a long horizon, and rewards those who stay the course.
This very fund, for instance, delivered zero returns between January 2018 and late 2020, an almost three-year phase that would have tested any investor’s resolve. But since then, it has staged a remarkable comeback.
Consider its 10-year returns: 21.96 per cent annualised, making it the best performer in its category. Even more impressive are its 24,26 per cent SIP returns. Which means, had you started a Rs 10,000 monthly SIP a decade ago, you’d be sitting on more than Rs 44 lakh today.
Its rolling return record is equally solid. Based on five-year daily rolling returns in the last five years, the fund:
- Beat its benchmark 100 per cent of the time
- Delivered above 15 per cent returns 89 per cent of the time
Not bad for a fund whose sheer scale could have been its biggest handicap.
So, where is the fund placing its biggest small-cap bets?
We know the fund has held familiar large-cap names like SBI, Asian Paints and Axis Bank in its portfolio. But its real conviction shows up in its lesser-known, under-the-radar holdings—stocks where it owns a significant chunk of the company.
Here are a few:
| Company | Stake held by Nippon India Small Cap Fund |
|---|---|
| NIIT Learning Systems | 8.94% |
| Honda India Power Products | 8.82% |
| Vindhya Telelinks | 8.24% |
| Elantas Beck India | 8.21% |
| NIIT | 8.17% |
These are not your typical headline-grabbing stocks. But that’s what makes them worth paying attention to. The fund’s outsized stakes suggest long-term conviction.
One particularly interesting holding is Zydus Wellness, where the fund owns a 5.26 per cent stake. What makes this more notable is that PPFAS (Parag Parikh Financial Advisory Services) Mutual Fund—known for its cautious, high-conviction style—has also begun buying into the company in recent months, something which we covered in this piece. When two fund houses with vastly different philosophies start aligning on a stock, it’s worth paying attention.
What should investors make of this?
If you already invest in this fund, these holdings are a reminder that your money is riding not just on the India growth story, but on a carefully curated list of businesses that don’t always make the news.
And if you’re still on the sidelines? This list is a window into how big fund managers think and where they’re quietly placing their bets for the next decade.
Want to know whether the funds in your portfolio are hiding any quiet performers like these?
Try Value Research Fund Advisor—a personalised service that helps you choose, review, and track mutual funds that match your goals and risk appetite.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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