A look at this small-cap fund that beat its benchmark by 10%

Summary: A young fund playing in a risky corner of the market, it has seen rapid asset growth and sharp performance swings. This piece breaks down its portfolio, early track record and what investors should know. Small-caps make headlines when markets are roaring, with stories of multibaggers and overnight wealth creation. But they can also make your stomach churn when the tide turns. That’s the tightrope Motilal Oswal Small Cap Fund asks investors to walk. Barely two years old—it was launched in December 2023—this fund has already gathered over Rs 5,200 crore in assets as of August 2025. That’s not a timid start. But how does this fund stack up so far? Let’s see what it’s all about. What Motilal Oswal Small Cap Fund is trying to do By mandate, Motilal Oswal Small Cap Fund must park at least 65 per cent of its money in small-cap stocks. Translation: it’s fishing in the riskier part of the pond, where companies are young, less researched and often at the beginning of their growth story. The lure is obvious: Small caps can grow faster than large, established firms. But the trade-off is brutal swings. These funds are not “core” holdings. Think of them as the spicy chutney on your plate. Add some for flavour, but don’t try eating a whole meal of it. For most investors, 15–20 per cent of your equity allocation here is plenty. A short perfor