HDFC Small Cap Fund Records Negative 2026 Return as Category Performance Gap Widens
5paisa Capital Ltd
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Last Updated: 15th October 2026 - 01:35 pm
Key Takeaways
- HDFC Small Cap Fund recorded a year-to-date return of -1.2% through 14 October 2026.
- Bank of India Small Cap Fund delivered a 32.71% return over the same period, creating a 33.91-percentage-point difference.
- A study of 36 small-cap schemes found considerable differences in returns and portfolio composition.
Small-Cap Fund Returns Diverge in 2026
Returns across India's small-cap mutual fund category have varied widely in 2026, with HDFC Small Cap Fund recording a negative year-to-date return while several other schemes remained in positive territory.
An analysis reported by Mint on 15 October found that HDFC Small Cap Fund had delivered a return of -1.2% during the year through 14 October 2026.
Bank of India Small Cap Fund, at the other end of the reported performance range, had generated a year-to-date return of 32.71%.
The difference between the two schemes was 33.91 percentage points.
The study covered a category comprising 36 small-cap mutual fund schemes.
The reported figures highlight dispersion within a category whose schemes must ordinarily invest at least 65% of their assets in small-cap companies.
Differences Extend Beyond Year-to-Date Returns
The comparison also identified variations across longer performance periods.
HDFC Small Cap Fund recorded a one-year return of -2.48%, according to the study.
However, none of the schemes in the analysed category had generated negative returns over the three-year and five-year periods considered.
These performance comparisons need to be interpreted according to their respective measurement periods. Year-to-date figures, one-year returns and annualised multi-year returns describe different investment horizons.
The study's 2026 year-to-date figures provide a snapshot through 14 October rather than a forecast of how the schemes will perform over the remainder of the year.
How the Portfolios Compare
Portfolio data as of 30 September 2026 showed differences in the asset allocation of the two schemes.
| Portfolio Metric | HDFC Small Cap Fund | Bank of India Small Cap Fund |
|---|---|---|
| Equity allocation | 90.07% | 85.67% |
| Cash and cash equivalents | 9.93% | 8.74% |
| Small-cap share of equity portfolio | 82.59% | 91.76% |
| Mid-cap share of equity portfolio | 10.20% | 6.00% |
| Large-cap share of equity portfolio | 7.21% | 2.24% |
The market-capitalisation breakdown is expressed as a share of the equity portfolio, whereas the headline equity and cash allocations are expressed as a share of overall assets. These measures therefore have different denominators.
Bank of India Small Cap Fund held a larger proportion of its equity portfolio in small-cap companies.
HDFC Small Cap Fund had relatively greater exposure to large-cap and mid-cap stocks.
Both schemes held 85 stocks, according to the reported portfolio comparison.
Portfolio Composition and Returns
Different portfolio structures can produce different returns even when schemes operate under the same SEBI mutual fund category.
Individual security selection, sector weights, market-cap exposure, cash holdings and transaction timing can all affect fund performance.
The reported allocation differences help describe how the two portfolios were constructed, but they do not independently establish which factors caused the return gap.
The comparison also demonstrates that classification within the small-cap category does not produce uniform returns across fund houses.
The findings represent historical scheme performance through a specified date and do not indicate future returns.
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