Looking to tap into high-growth opportunities through mutual funds in 2025? Small mutual fund investments, particularly small-cap funds, are gaining traction as investors look beyond large caps to discover hidden gems. In this blog, we explore the Top 5 Small Cap Funds for 2025 based on performance, consistency, and expert reviews.
These are the best mutual funds to watch if you’re willing to take slightly higher risks for potentially higher rewards.
Why Small Cap Mutual Funds Matter in 2025
Small cap mutual funds focus on companies with relatively small market capitalization, often in emerging sectors or new-age businesses. These funds tend to outperform during bull runs and offer massive wealth creation potential over the long term.
But not all small mutual fund options are created equal. Choosing the best mutual fund means looking beyond just returns—you should assess volatility, fund manager consistency, and risk-adjusted performance.
Top 5 Small Cap Funds for 2025 – Quick Comparison
| Rank | Fund Name | 3Y CAGR (%) | AUM (â‚ą Cr) | Fund Manager(s) |
| 1 | Tata Small Cap Fund | ~35% | 5,200 | Satish Chander |
| 2 | Bandhan Small Cap Fund | ~34% | 2,500 | Saurabh Pant |
| 3 | Edelweiss Small Cap Fund | ~36% | 3,000 | Trideep Bhattacharya |
| 4 | Invesco India Small Cap Fund | ~33% | 2,800 | Pranav Gokhale |
| 5 | ITI Small Cap Fund | ~31% | 1,000 | Pradeep Gokhale |
Note: Returns and AUM figures are approximate and based on trailing 3-year performance as of mid-2025.
Fund-Wise Breakdown
1. Tata Small Cap Fund
Ranked #1 for 2025, this fund scores highly on consistency and portfolio quality. It focuses on scalable, quality businesses with strong promoter backing and low debt. Despite lower recent returns than Edelweiss, its long-term thesis remains stronger.
Why it stands out:
- Low churn rate
- Smart allocation to future-ready sectors
- One of the best mutual fund choices for balanced growth
2. Bandhan Small Cap Fund
Previously underperformed but has recently delivered strong alpha. The fund now ranks higher due to improved stock selection and reduced volatility.
Why it stands out:
- Sectoral diversification
- Better risk-adjusted returns than peers
3. Edelweiss Small Cap Fund
Great 1-year and 3-year performance, but was ranked slightly lower due to overexposure to some volatile sectors. Still a very strong small mutual fund option.
Why it stands out:
- Momentum-driven portfolio
- Recent CAGR beating category average
4. Invesco India Small Cap Fund
A consistent performer with steady returns. It avoids thematic bets and sticks to a core equity strategy, making it suitable for conservative small cap investors.
Why it stands out:
- Conservative stock picking
- One of the safest small mutual funds with long-term potential
5. ITI Small Cap Fund
A hidden gem. Though smaller in AUM, this fund has been gaining attention due to its agile investing style and ability to identify turnarounds early.
Why it stands out:
- High alpha generation
- Ideal for aggressive investors looking for outsized gains
Final Thoughts
If you’re looking to add high-growth potential to your portfolio, the Top 5 Small Cap Funds for 2025 offer some of the best mutual fund options this year. Whether you’re after aggressive returns or a more balanced small mutual fund, these funds are poised to ride India’s economic growth wave.
Disclaimer: The information provided is for informational purposes only. Investors are advised to conduct their own due diligence or consult a financial advisor before investing in any mutual funds.
