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Summary: Small-cap funds have long rewarded patient investors with outsized returns, and a handful of schemes have done something remarkable: turn a simple Rs 10,000 monthly SIP into over Rs 35 lakh in a decade. Here are three funds that have quietly done exactly that.
Small-cap funds invest in companies ranked 251st and beyond by market capitalisation — businesses that are often younger, nimbler and brimming with growth potential, but also far more sensitive to market swings.
These are not funds for the faint-hearted; during corrections, they can fall sharply and fast. Yet, for those who stay the course, the rewards can be handsome. As a category, small-cap funds have delivered 10-year annualised returns of 17.23 per cent and five-year annualised returns of 19 per cent, among the highest across equity fund categories.
With that in mind, we look at three small-cap funds that turned a simple Rs 10,000 monthly SIP into over Rs 35 lakh in 10 years.
#3 Axis Small Cap Fund
- 10-year SIP return: 20.46 per cent
- Value of a Rs 10,000 monthly SIP after 10 years: Rs 35.51 lakh
- Assets under management: Rs 23,919 crore
- Expense ratio: 0.65 per cent
Top 5 stock holdings
| Stock | % of assets |
|---|---|
| CCL Products | 3 |
| Krishna Institute | 2.63 |
| JB Chemicals | 2.58 |
| MCX | 2.55 |
| City Union Bank | 1.98 |
#2 Nippon India Small Cap Fund
- 10-year SIP return: 22.41 per cent
- Value of a Rs 10,000 monthly SIP after 10 years: Rs 39.55 lakh
- Assets under management: Rs 61,809 crore
- Expense ratio: 0.65 per cent
Top 5 stock holdings
| Stock | % of assets |
|---|---|
| MCX | 2.07 |
| HDFC Bank | 1.81 |
| Karur Vysya Bank | 1.49 |
| Apar | 1.41 |
| TD Power Systems | 1.34 |
#1 Quant Small Cap Fund
- 10-year SIP return: 24.95 per cent
- Value of a Rs 10,000 monthly SIP after 10 years: Rs 45.23 lakh
- Assets under management: Rs 30,374 crore
- Expense ratio: 1.13 per cent
Top 5 stock holdings
| Stock | % of assets |
|---|---|
| Reliance Industries | 9.47 |
| RBL Bank | 4.75 |
| Adani Power | 4.38 |
| HFCL | 3.44 |
| Sun TV Network | 2.92 |
The 3 small-cap standouts
Had you started a Rs 10,000 monthly SIP in any of these funds 10 years back, your wealth would have grow to over Rs 35 lakh today
| Fund name | 10-year SIP returns (%) | Value Research Rating |
|---|---|---|
| Quant Small Cap | 24.95 | ★★★★ |
| Nippon India Small Cap | 22.41 | ★★★★ |
| Axis Small Cap | 20.46 | ★★★★ |
| Returns are for direct plans as of May 8, 2025 | ||
Should you invest in any of these funds?
Small-cap funds are powerful wealth creators, but only in the right hands. They are best suited for investors who have a high risk appetite, a long investment timeframe of at least 7-10 years and the discipline to stay invested through bouts of severe volatility.
Small-cap funds can fall hard during market corrections; if you redeem in panic, you lock in losses. If you check your portfolio every week and lose sleep over short-term swings, small-cap funds may not be for you.
If you want to know whether to invest in any of the abovementioned funds or if other mutual funds suit your financial needs better, subscribe to Value Research Fund Advisor and get personalised, expert-backed recommendations. So that you invest with clarity, not guesswork.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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