Smallcap mutual funds are best performing funds with up to 16% return since last Diwali. Will it last?
Small cap mutual funds have proven to be the top performers in the market, offering impressive returns as high as 16%. The Bank of India Small Cap Fund took the lead with a notable return of 15.51%. However, investment experts emphasize a cautious approach to valuations, despite an optimistic long-term outlook for small caps.
Small-cap mutual funds have recently shown remarkable performance, outpacing other mutual fund categories since last Diwali, according to an analysis by ETMutualFunds. With an average return of 1.26% since the last Diwali on October 20, 2026, small-cap funds delivered returns ranging from 1.55% to 15.51%. The Bank of India Small Cap Fund emerged as the top performer, gaining 15.51%, followed by the TRUSTMF Small Cap Fund with 14.70% return.
However, not all small-cap funds performed well, with Nippon India Small Cap Fund suffering a 1.55% loss. Analysts suggest that while the long-term outlook for small-cap funds remains positive, investors must exercise caution due to their higher volatility and potential sharp corrections. The current market correction might provide an opportunity for long-term investors to gradually build exposure through SIPs and maintain diversification in their portfolios.
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