Eight small cap schemes delivered more than 30% in 3-year horizon

Eight small cap schemes have offered more than 30% returns in the three-year horizon, a study by ETMutualFunds. Quant Small Cap Fund, the topper in the list, offered a whopping 49% returns in three years. Canara Robeco Small Cap Fund, next in the list, delivered 37.74% in the same period. These returns might come as a surprise to many mutual fund investors as small cap schemes were down and out of favour in the last one year.

The category has offered a measly return of 3.22% in the last one year. However, the schemes have staged a comeback in the last few months. Small cap schemes category gained 5.31% in the last three months.

Source: ACE MF, Returns as on 31 October 2022

Note, this is not a recommendation. This exercise just analyzed the performance of small cap mutual fund schemes that have delivered more than 30% returns in the three-year horizon. You need to include other factors while choosing a scheme to invest in. For our recommendations, please see: Best small cap funds to invest in 2022

Small cap schemes are always considered risky. However, they also have the potential to deliver very high returns over a long period of time. The trouble is these schemes are also notorious for their very long bear phases. When the market gets into a lean phase small cap segments lose heavily as investors look for safer investment options. Small cap companies also have corporate governance issues.

This is why ETMutualFunds do not recommend small cap schemes to new and inexperienced investors. We always tell investors to gain experience and knowledge before investing in small cap schemes. We believe that only investors with a very high risk appetite and stomach for volatility should invest in small cap schemes. They also should have a long investment horizon of, say, seven to 10 years.