Small-Cap Mutual Funds Lead Equity Categories Since Last Diwali; Top Scheme Returns 15.51%

Key Takeaways

• Small-cap mutual funds recorded an average return of 1.26% between 20 October 2025 and 24 October 2026, outperforming the other equity categories included in an ETMutualFunds study. 
• Bank of India Small Cap Fund led the 31 schemes analysed with a 15.51% return, followed by TRUSTMF Small Cap Fund at 14.70%. 
• The data also showed wide variation within the category, demonstrating that the relatively better category-level performance was not shared equally by all small-cap schemes. 

Small-cap mutual funds emerged as the strongest pure-equity category in a study of fund performance since last Diwali, even as several other diversified equity categories recorded negative average returns over the same period. 

An ETMutualFunds analysis published on 27 October examined regular growth options across equity and equity-oriented schemes, excluding sectoral, thematic and equity-oriented hybrid funds. Returns were calculated for the period from 20 October 2025 to 24 October 2026. 

Small-cap funds generated an average return of 1.26% during the period. The study covered 31 schemes in the category. 

Bank of India Small Cap Fund topped the category with a return of 15.51%, while TRUSTMF Small Cap Fund followed with 14.70%. DSP Small Cap Fund returned 9.25%, and Motilal Oswal Small Cap Fund recorded 8.64%. 

Performance was far from uniform. 

Nippon India Small Cap Fund, identified in the study as the largest small-cap scheme by assets managed, recorded a negative return of 1.55% during the same period. The spread between individual scheme returns highlights the degree of variation that can exist even within a single mutual fund category. 

The comparison with other equity categories was particularly stark. 

Contra funds posted an average decline of around 9.78%, the weakest category-level performance in the analysis. Large-cap funds declined by an average 9.34%, while ELSS funds recorded an average loss of 8.68%. 

Large-and-mid-cap schemes were down an average 7.06%, while flexi-cap funds returned an average -6.79%. Value and focused funds posted average declines of 6.50% and 6.18%, respectively. Mid-cap funds lost an average 4.65%, while multi-cap schemes declined 4.33%. 

The figures therefore show relative outperformance by small-cap funds rather than uniformly strong returns across every scheme in the category. 

They also represent a specific historical measurement period. The figures are point-to-point returns calculated between October 2025 and October 2026 and should not be confused with longer-term CAGR, rolling returns or SIP/XIRR figures. 

The dataset offers a snapshot of how different equity mutual fund categories navigated the period following Diwali 2025. It does not establish how the same schemes or categories will perform in subsequent market cycles, and historical performance is not an indication of future returns.