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5 top small-cap funds by CAGR, Rank, AUM in September; how they compare on volatility measures
6 min read | Updated on September 11, 2026, 15:31 IST
SUMMARY
Among these schemes, Bank of India small-cap fund has delivered the best risk-adjusted performance. SBI small-cap is the least volatile but does not feature in the top five by returns. HDFC small-cap has the largest AUM among non-top performers and a negative Sharpe.
Investors chasing the highest CAGR without checking the risk ratios may find themselves in a fund whose swings are harder to tolerate. | Representational image
Several small-cap mutual funds have delivered returns above 19% compounded annually over the past five years. However, data shows that the fund with the highest return is not the one with the largest assets under management (AUM), and the fund with the best risk-adjusted performance is not the one topping the return charts.
This article lists top five small-cap schemes by 5-year performance, AUM and rankings, and their volatility measures. The analysis of these factors reveals patterns that are worth observing closely.
Top 5 small-cap schemes ranked by performance over 5 years
| Fund | Rank |
|---|---|
| Invesco India Smallcap Fund | 1 |
| Bank of India Small Cap Fund | 2 |
| Quant Small Cap Fund | 3 |
| Bandhan Small Cap Fund | 4 |
| Nippon India Small Cap Fund | 5 |
Invesco India Smallcap Fund ranks first, followed by Bank of India Small Cap Fund at rank 2 and Quant Small Cap Fund at rank 3. Bandhan Small Cap Fund holds rank 4 and Nippon India Small Cap Fund rounds out the top 5 at rank 5.
The data for top five schemes by CAGR over five years, however, tells a slightly different story. In this list we have two schemes at the sixth position due to their near identical returns.
Top 5 schemes by CAGR over 5 years
| S.No. | Fund | CAGR (%) |
|---|---|---|
| 1 | Invesco India Smallcap Fund | 20.62 |
| 2 | Bank of India Small Cap Fund | 20.56 |
| 3 | Bandhan Small Cap Fund | 20.25 |
| 4 | Quant Small Cap Fund | 20.09 |
| 5 | ITI Small Cap Fund / Nippon India Small Cap Fund | 19.53 / 19.29 |
ITI Small Cap Fund, which appears in the CAGR list with19.53% returns, does not feature in the top five by rank. Conversely, Nippon small-cap appears in the rank list at number five but is sixth by CAGR.
Top 5 Small-Cap Funds by AUM*
| Scheme | AUM (₹ crore) |
|---|---|
| Nippon India Small Cap Fund | 83,006 |
| SBI Small Cap Fund | 42,416 |
| HDFC Small Cap Fund | 41,819 |
| Quant Small Cap Fund | 36,196 |
| Bandhan Small Cap Fund | 35,227 |
Nippon India Small Cap Fund dominates with ₹83,006 crore in assets, which is 2.4 times the size of Bandhan's ₹35,227 crore. Yet Nippon small-cap ranks only fifth by performance and sixth by CAGR.
SBI Small Cap Fund and HDFC Small Cap Fund, which hold the second and third positions by AUM, do not appear in either the top five by rank or the top five by CAGR. Neither Invesco India small-cap, the top performer, nor ITI small-cap, the fifth by CAGR, appears in the top five by AUM at all. This shows that investors' money does not always flow to the best-performing funds. Moreover, a large AUM does not guarantee top-tier returns.
The data on volatility measures of the schemes mentioned above reveals the most important patterns:
Volatility measures of all schemes listed above
| Fund | Fama | Beta | Std Deviation | Sharpe |
|---|---|---|---|---|
| Invesco India Smallcap Fund | 0.08 | 1.04 | 1.04 | 0.06 |
| Bank of India Small Cap Fund | 0.06 | 0.92 | 1.04 | 0.09 |
| Quant Small Cap Fund | 0.03 | 0.85 | 0.96 | 0.06 |
| Bandhan Small Cap Fund | 0.07 | 0.96 | 0.99 | 0.05 |
| Nippon India Small Cap Fund | 0.01 | 0.86 | 0.94 | 0.04 |
| SBI Small Cap Fund | 0.01 | 0.77 | 0.87 | 0.03 |
| HDFC Small Cap Fund | 0.01 | 0.91 | 0.94 | -0.01 |
| ITI Small Cap Fund | 0.05 | 0.96 | 1.06 | 0.08 |
Beta measures a fund's sensitivity to market movements. A beta above 1 means the fund moves more than the market; below 1 means it moves less. Standard deviation measures the actual volatility of returns. The Sharpe ratio measures return per unit of risk, while the Fama measures stock-picking ability net of market risk.
Data shows that only Invesco small-cap has a beta above 1, meaning it amplifies market movements slightly. SBI Small Cap Fund has the lowest beta at 0.77, indicating it is 23% less volatile than its benchmark. Quant small-cap, despite being ranked third, has a beta of 0.85, the second-lowest among the ranked funds, suggesting it has achieved its returns with relatively lower market sensitivity.
ITI Small Cap Fund has the highest standard deviation at 1.06, followed by Invesco and Bank of India funds, both at 1.04. SBI small cap again has the lowest standard deviation at 0.87. The spread between the most and least volatile fund is 0.19, which is meaningful for investors who track their portfolio value daily.
Bank of India Small Cap Fund has the highest Sharpe at 0.09, meaning it generated the best risk-adjusted return among all eight funds, despite ranking second on CAGR. ITI small-cap fund, which is fifth by CAGR and absent from the rank list, has the second-highest Sharpe at 0.08. Invesco, the top performer by return and rank, has a Sharpe of 0.06, tied with Quant. HDFC Small Cap Fund, which manages ₹41,819 crore in assets, has a negative Sharpe of -0.01, meaning it generated essentially no excess return over the risk-free rate during the period measured, despite sitting among the top five by AUM.
Fama is highest for Invesco small cap fund at 0.08, followed by Bandhan at 0.07 and Bank of India at 0.06. Nippon, SBI and HDFC all sit at 0.01, meaning their returns were almost entirely explained by market exposure rather than active selection.
No single fund dominates every dimension. Investors chasing the highest CAGR without checking the risk ratios may find themselves in a fund whose swings are harder to tolerate than what the CAGR number suggests.
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