Quant Small Cap Fund generates 22.63% 5 year returns. Here are the best Small Cap funds to invest in 2022

Smallcap funds have outperformed in the last 5 years.

equity mutual funds

Usually, it is recommended to limit your exposure to the small-cap funds. The reasoning is that small-cap funds are riskier than large-cap funds. Small-cap funds can give higher returns than large-cap funds, and therefore even with the high risk, many investors prefer to invest in small-cap funds. As a general rule, you should diversify your portfolio and limit the exposure to small-cap funds to less than 10%.

The last 5 years have been good for the stock markets, especially after the pandemic. The stock markets have witnessed a steep rise. The rise in small-cap firms has been higher as they were in a deep value zone at the beginning of the pandemic. The Nifty Small-cap 100 PE ratio was 18.45 on 26 June 2020. As of 6 September 2022, the PE ratio is still 17.76 only. This means that the small-cap indices are still reasonable. 

Related: How to choose an equity mutual fund?

Best small-cap funds to invest in 2022

The best small-cap funds to invest in India are given below. The 5 year returns of the funds are as much as 22.63%.

Best small cap funds to invest in 2022

If you select these small-cap funds, the returns are good in the last 5 years. Also, it is possible that the returns might continue in the future as well. If you select the right funds, you can get good long term returns. Make sure to limit the exposure to small-cap funds as they are riskier.

Related: Best equity mutual funds to invest in India

The small-cap funds have given good returns in the last 5 years. The chances are that the returns might continue as the small-cap funds still look reasonably priced. The PE ratio of Nifty Smallcap100 is still just 17.76, and there are chances of an upward revision in the PE ratio in the coming years. If you are comfortable with risk, then you can take a small exposure of around 10% in the small-cap funds.

Related: How debt and equity mutual funds differ in risk

Large Cap, Mid Cap & Small Cap Stocks & Mutual Funds - As per SEBI

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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