Active Small-Cap Funds: Are You Missing 20% Returns?
Active small-cap mutual funds have on average beaten their benchmark index by a wide margin over the last decade, both in returns earned and losses avoided. Here is what that means for your SIP money.
A ₹5,000/month SIP at 20% CAGR over 10 years grows to nearly ₹38 lakh — that's 6 years of a median Indian salary.
Active small-cap funds delivered this return — beating their benchmark by 16 percentage points
Key Takeaways
Compare your existing small-cap SIP's CAGR against its benchmark on platforms like MFCentral or Value Research — if it lags by more than 3%, consider switching.
Check your fund's maximum drawdown history on Morningstar India or AMFI; a fund that loses 40% when markets fall 56% is protecting your wealth.
If you have a 7-plus year horizon, review whether your equity allocation includes at least one SEBI-classified small-cap fund alongside large-cap holdings.
Active small-cap mutual funds have on average beaten their benchmark index by a wide margin over the last decade, both in returns earned and losses avoided. Here is what that means for your SIP money.
Here's what happened: Active small-cap equity funds have delivered around 20% annualised returns on average since 2013, comfortably outpacing their benchmark indices.. These funds also showed roughly 16 percentage points lower drawdown than benchmarks, meaning they fell significantly less during market crashes.. Among all active equity fund categories, small-cap funds showed the strongest long-term outperformance over passive index alternatives in the same space..
What you should do: Compare your existing small-cap SIP's CAGR against its benchmark on platforms like MFCentral or Value Research — if it lags by more than 3%, consider switching.. Check your fund's maximum drawdown history on Morningstar India or AMFI; a fund that loses 40% when markets fall 56% is protecting your wealth.. If you have a 7-plus year horizon, review whether your equity allocation includes at least one SEBI-classified small-cap fund alongside large-cap holdings..
Small-cap index funds in India track the BSE 250 SmallCap or Nifty Smallcap 250 — both include illiquid stocks where active fund managers consistently spot mispriced opportunities that passive funds cannot avoid.
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- [1]“Average active small-cap fund delivered 20.1% CAGR, with 16 percentage points lower drawdown than the benchmark” mint - money · 19 Jul 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.