Five Small-Cap Mutual Funds Deliver Over 16% Annualised Returns in Three Years

Key Takeaways

• Five small-cap mutual funds generated annualised three-year returns above 16% as of October 14, 2026.
• Bandhan Small Cap Fund led the group at 21.2%, followed by ITI Small Cap Fund at 20.6%.
• The dataset also showed several small-cap schemes with single-digit three-year returns, highlighting substantial dispersion within the category.

Three-year return data for small-cap mutual funds shows a wide gap between individual schemes, with five funds delivering annualised returns above 16% as of October 14, 2026.

Bandhan Small Cap Fund recorded the highest return in the dataset at 21.2% annualised over the three-year period. ITI Small Cap Fund followed at 20.6%.

Invesco India Smallcap Fund returned 19.1%, while Bank of India Small Cap Fund delivered 19%. Mahindra Manulife Small Cap Fund completed the group with an annualised three-year return of 16.9%.

The range becomes more pronounced when the broader category is considered.

According to the same ETWealth dataset, around five small-cap schemes generated three-year returns of between 8.5% and 9.8%. These included HDFC Small Cap Fund, Tata Small Cap Fund, ICICI Prudential Smallcap Fund, Canara Robeco Small Cap Fund and SBI Small Cap Fund.

The difference between the higher and lower ends of the category illustrates the extent to which scheme-level outcomes can diverge even when funds operate under the same broad SEBI classification.

Small-cap funds are required to maintain substantial exposure to smaller listed companies, but individual portfolios can still differ considerably in stock selection, sector allocations, portfolio concentration, cash holdings and the timing of purchases and sales.

The returns cited are historical annualised returns over the specified three-year period. They are not SIP returns and should not be interpreted as expected future returns.

Performance rankings can also change materially depending on the end date and measurement period. A fund leading over three years may rank differently over one-year, five-year or rolling-return periods.

The October dataset is therefore most useful as an illustration of return dispersion within the small-cap mutual fund category, rather than as a ranking of schemes for future investment.