5 small-cap funds with the highest 10-year SIP gains today

Summary: They’ve been thrilling, punishing and rewarding for those who stayed the course. We looked at how five small-cap funds performed through a decade of monthly SIPs. The journey reveals more than just numbers. It offers a peek into what long-term investing in this space really demands.

If you watch the markets closely, you’ve probably noticed that small-cap funds rack up some big numbers. Over the past 10 years, the small-cap mutual fund category has delivered an eye-popping average return of around 17.6 per cent. This is far ahead of the large-cap’s 12.6 per cent.

On paper, it’s an investor’s dream. In reality, these high flyers can turn into free-fallers when sentiment sours. A 20 per cent gain one year can be followed by a 30 per cent drop the next. That’s why seasoned investors compare small-cap investing to a roller-coaster, thrilling if you can stomach the ride, terrifying if you can’t.

Yet in 2025, those who stayed strapped in have reaped rich rewards. We looked at the top five small-cap funds based on 10-year SIP returns to see how they’ve fared and what investors can really take away from the leaderboard.

#5 HSBC Small Cap Fund (Direct plan)

• 10-year SIP return: 20.73 per cent
• Rs 10,000/month SIP started 10 years back. Current value: Rs 34.7 lakh
• Assets under management (AUM): Rs 16,536 crore
• Expense ratio: 0.64 per cent

Top 5 stock holdings

#4 Kotak Small Cap Fund (Direct plan)

• 10-year SIP return: 20.75 per cent
• Rs 10,000/month SIP started 10 years back. Current value: Rs 35.8 lakh
• Assets under management (AUM): Rs 17,903 crore
• Expense ratio: 0.52 per cent

Top 5 stock holdings

#3 HDFC Small Cap Fund (Direct plan)

• 10-year SIP return: 21.49 per cent
• Rs 10,000/month SIP started 10 years back. Current value: Rs 37.3 lakh
• Assets under management (AUM): Rs 36,353 crore
• Expense ratio: 0.71 per cent

Top 5 stock holdings

#2 Axis Small Cap Fund (Direct plan)

• 10-year SIP return: 22.03 per cent
• Rs 10,000/month SIP started 10 years back. Current value: Rs 38.4 lakh
• Assets under management (AUM): Rs 26,143 crore
• Expense ratio: 0.57 per cent

Top 5 stock holdings

#1 Nippon India Small Cap Fund (Direct plan)

• 10-year SIP return: 23.96 per cent
• Rs 10,000/month SIP started 10 years back. Current value: Rs 42.6 lakh
• Assets under management (AUM): Rs 65,922 crore
• Expense ratio: 0.64 per cent

Top 5 stock holdings

Small-cap funds: Who’s topping the charts

The other side of the story

For all their stellar returns, small caps can be ruthless in downturns. In the March 2020 correction, the Nifty Smallcap 250 index fell close to 60 per cent, wiping out gains from the previous one-and-a-half years. Funds tracking or investing in this space were hit just as hard, if not harder.

Nippon India Small Cap, for instance, was also a victim of this correction. The difference lies in how quickly it rebounded. While the index took over 13 months to recover from the Covid crash, the fund recovered in a span of 8 months.

However, as an investor, you must know that no fund is guaranteed to recover earlier from the crash. You could end up in a situation where, although the broad market has recovered, you are still in the red zone.

How SIPs change the game

One way investors can manage the wild swings is through systematic investment plans (SIPs). By putting in a fixed sum at regular intervals, you buy more units when markets are down and fewer when they’re up, averaging your cost over time.

This approach takes the pressure off trying to “catch the bottom” and keeps you invested through recovery phases, which often come when sentiment is at its worst. Over the past decade, SIPs in the top-performing small-cap funds have handsomely rewarded patience, showing that time in the market trumps timing the market.

So, is this space for you?

Small-cap funds can play a role in a diversified portfolio if you:

• Have a horizon of at least 7–10 years.
• Can tolerate significant drawdowns without panic.
• Use SIPs or phased entry to manage volatility.
• Limit allocation to a small portion of your equity exposure, not your entire portfolio.

They may not be suitable if you’re investing for goals less than five years away or if large swings in value would push you to exit prematurely.

Thinking of starting a Rs 10,000 SIP in a small-cap fund?
Before you take the plunge, see which small-cap funds our Value Research Fund Advisor team believes have the right mix of performance, consistency and staying power.

These aren’t just top-return names, they’re backed by decades of research, deep analysis and practical investing insights.

See our top-rated fund picks now.

Try Fund Advisor