Small-cap mutual funds: How large- and mid-cap exposure differs across schemes; check 1-year returns
Small-cap mutual funds are required to invest at least 65% of their assets in small-cap stocks. However, fund managers have flexibility over the remaining portion of the portfolio and can invest in large- and mid-cap companies based on their investment strategy.
As a result, small-cap funds can have significantly different exposure to larger companies. A comparison of the top 10 small-cap funds shows wide differences in their large- and mid-cap allocations, while their one-year returns also varied significantly.
Which small-cap funds have the highest large-cap allocation?
| Small-cap funds | Large-cap allocation | 1-year return |
| Quant Small Cap Fund | 14.90% | 13.67% |
| Nippon India Small Cap Fund | 14.59% | 8.26% |
| Invesco India Small Cap Fund | 13.83% | 14.23% |
| HDFC Small Cap Fund | 7.47% | -2.58% |
| Kotak Small Cap Fund | 7.21% | 5.75% |
| Axis Small Cap Fund | 7.04% | 9.74% |
| Bandhan Small Cap Fund | 7.02% | 9.73% |
| HSBC Small Cap Fund | 2.02% | 12.17% |
| SBI Small Cap Fund | 1.03% | 6.54% |
| DSP Small Cap Fund | 0% | 17.22% |
*Source: Value Research, Portfolio allocation as on 31 August 2026, Direct plans, Returns as on 21 September 2026, Only top 10 funds by AUM considered
Quant Small Cap Fund had the highest large-cap allocation among the 10 funds at 14.90%, followed by Nippon India Small Cap Fund at 14.59%. At the other end, DSP Small Cap Fund had no large-cap allocation, while SBI Small Cap Fund had only 1.03%.
DSP Small Cap, which had zero large-cap exposure, delivered the highest one-year return among the 10 funds at 17.22%. Quant Small Cap, despite having the highest large-cap allocation, delivered a 13.67% return.
Which small-cap funds have the highest mid-cap allocation?
| Small-cap funds | Mid-cap allocation | 1-year return |
| HSBC Small Cap Fund | 23.06% | 12.17% |
| Kotak Small Cap Fund | 16.84% | 5.75% |
| Invesco India Small Cap Fund | 16.49% | 14.23% |
| Nippon India Small Cap Fund | 13.43% | 8.26% |
| Bandhan Small Cap Fund | 12.60% | 9.73% |
| Axis Small Cap Fund | 11.39% | 9.74% |
| HDFC Small Cap Fund | 10.93% | -2.58% |
| Quant Small Cap Fund | 9.74% | 13.67% |
| DSP Small Cap Fund | 7.70% | 17.22% |
| SBI Small Cap Fund | 3.16% | 6.54% |
*Source: Value Research, Portfolio allocation as on 31 August 2026, Direct plans, Returns as on 21 September 2026, Only top 10 funds by AUM considered
HSBC Small Cap Fund had the highest mid-cap allocation at 23.06%, followed by Kotak Small Cap at 16.84% and Invesco India Small Cap at 16.49%.
SBI Small Cap Fund had the lowest mid-cap exposure at 3.16%, followed by DSP Small Cap at 7.70%.
HSBC’s relatively high mid-cap allocation coincided with a 12.17% one-year return.
What does the combined large- and mid-cap allocation show?
| Small-cap funds | Large + Mid-cap allocation | 1-year return |
| Invesco India Small Cap Fund | 30.32% | 14.23% |
| Nippon India Small Cap Fund | 28.02% | 8.26% |
| HSBC Small Cap Fund | 25.08% | 12.17% |
| Quant Small Cap Fund | 24.64% | 13.67% |
| Kotak Small Cap Fund | 24.05% | 5.75% |
| Bandhan Small Cap Fund | 19.62% | 9.73% |
| Axis Small Cap Fund | 18.43% | 9.74% |
| HDFC Small Cap Fund | 18.40% | -2.58% |
| DSP Small Cap Fund | 7.70% | 17.22% |
| SBI Small Cap Fund | 4.19% | 6.54% |
*Source: Value Research, Portfolio allocation as on 31 August 2026, Direct plans, Returns as on 21 September 2026, Only top 10 funds by AUM considered
Invesco India Small Cap Fund had the highest combined large- and mid-cap allocation at 30.32%, followed by Nippon India Small Cap at 28.02%. At the lower end, SBI Small Cap Fund had the lowest combined allocation at 4.19%, while DSP Small Cap had 7.70%.
The one-year return comparison shows that higher exposure to large- and mid-cap stocks did not necessarily translate into lower returns. DSP Small Cap, with the lowest combined allocation among the 10 funds, delivered the highest one-year return of 17.22%.
However, Invesco India Small Cap, which had the highest combined allocation at 30.32%, also delivered a 14.23% return.
Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.
